The SNP leader has called for Scottish politicians to reject the "disgraceful rhetoric" on immigration heard in Westminster.

In a keynote speech John Swinney urged a new "national political consensus" to embrace increased immigration as a solution to Scotland's dramatically declining population.

In a parliamentary debate on the state of Scotland's economy, the nationalist leader raised concerns that the falling population could damage the Scottish economy, prompting slower growth and fewer jobs.

He called for the Scottish parliament to be given further powers over immigration and the economy in order to tackle the problem.

Labour warned the policy would lead to passport controls at the Scottish/English border.

But Swinney argued that the need to boost the economy required radical measures.

"Population decline is the gravest threat to our economic well-being for a generation and more. Scotland's population is falling faster than any other European country," Swinney warned.

"Population decline is a chilling symptom of economic mismanagement. To reverse that trend we need full financial freedom for the parliament - the powers that will give Scotland a competitive advantage and create the conditions for growth and job creation."

Swinney called for increased powers for the Scottish parliament, arguing that first minister Jack McConnell has also spoken out on the need for higher immigration north of the border.

"I have no doubt his [McConnell's] sentiments are genuine. But his words count for nothing in the face of the disgraceful rhetoric and actions of the Westminster parties. The message they are sending out is essentially - don't come here," said Swinney.

"I believe there is a consensus of disgust in the Scottish parliament at the race to be the most racist going on at Westminster.

"Scotland has enormous economic potential. What we need now are the powers to compete to release that potential."

Responding to the speech, Labour said the debate on the Scottish economy was being "hijacked" by a discussion on asylum.

Labour MP Tom Harris said that in order to have an immigration and asylum policy it is vital to know who is entering and leaving the country - a move that would require passport checks at the border.

"This clearly illustrates the stark choice facing the people of Scotland," said Harris.

"While my colleagues in the Scottish parliament are discussing their plans to continue to grow Scotland's economy, the nationalists are planning to cut us off from our biggest market.

"If the nationalists want to run a separate immigration regime they will have to start checking visas at airports and at the points where people cross the border by road. This will do nothing to improve Scotland's economy."