The Home Office is set to levy a £500 surcharge on migrants entering the UK.

It was revealed on Monday that small print in the new Asylum and Immigration Bill allows the Home Office to impose the fee.

The charge would affect around 900,000 people and would raise around £450 million a year.

It would come on top of the £155 charged for work and study permits.

People making applications for asylum would be exempt.

The issue will go before MPs when the bill has its second reading in the Commons next week.

Home secretary David Blunkett is set to come under fire from businesses which rely on migrant workers as well as human rights campaigners.

The move comes amid a wider examination of the UK's immigration and asylum laws.

Officials defended the initiative because migrants make a "windfall gain through being granted access to the UK labour market".

And Blunkett has pledged to crackdown on those who seek to enter the UK illegally and those who breach the immigration rules once they have entered the UK.