Iain Duncan Smith has warned that no refugees from the Sangatte refugee camp should be allowed to enter the UK.

As it emerged that France is to close the controversial camp, Duncan Smith has told ministers to stop "waving the white flag" and stand up to the French administration.

He said that the French would be "laughing at us across breakfast tables all over the country" if ministers agreed to allow half of the 1,300 asylum seekers to enter the UK.

"Not one of those 1,300 should be allowed to set foot in Britain on the terms that seem to be on offer. Instead of waving the white flag, the government should seek a new deal with France," he said.

"Tony Blair, Jack Straw and David Blunkett have got us into this mess and now they are on the brink of capitulating completely."

Downing Street has welcomed "the renewed focus that there is on the French side in relation to Sangatte" but the prime minister's official spokesman warned that progress may be delayed until after elections in June

"We currently have an interim government in France and we have to wait until after the elections to take place, then obviously there will be discussions both home and away as we work out how to take this forward," he said.

And acknowledging the extent of the problem Number 10 said the asylum issue was under constant review.

"We recognise this is a very real problem. We are looking at how you can address the issue of asylum from end to end.

"We are very concerned to deal with this whole issue of economic migrants. One of the reasons for that is that has a direct bearing in terms of the perception and reception of genuine asylum seekers.''

Sangatte has an official capacity of around 600 but more than double that number are now seeking shelter in the Red Cross camp.

The French interior minister said yesterday that his government's "objective" was to close the camp in which refugees including Iraqi Kurds, Afghans and Iranians are housed in cramped conditions.

Eurotunnel says it stopped around 18,500 refugees trying to smuggle themselves into Britain in the first half of last year alone, with the vast majority coming from the camp.

Both Eurotunnel and freight operator English Welsh and Scottish Railways had repeatedly called for the camp to be closed as desperate asylum seekers bring trains to a halt.

The European parliament also urged the French government to take action to ensure the free movement of goods through the tunnel.

Shadow home secretary, Oliver Letwin, said it would be the "politics of the mad house" for Britain to take the refugees.

The latest moves come as it has been revealed that Home Office officials have drawn up a secret action plan to tackle the asylum crisis.

According to documents leaked to the Guardian, the plan includes using Navy warships to intercept people traffickers in the Mediterranean, the use of RAF transport aircraft for bulk deportations and the withholding of aid from countries that refuse to take back failed applicants.

The plans were drawn up for Tony Blair in advance of a meeting he chaired last Wednesday.

"It has become clear from the prime minister's discussions on this issue that concerted action is needed across government if we are to deliver a radical reduction in the numbers," said an accompanying memo.

However, the Department for International Development said that linking aid and asylum policies would be illegal.

Speaking on the BBC's Question Time programme last night, Clare Short said the idea had not been thought through.

The outspoken minister blamed "some clever little person'' in Number 10 for the policy.