More than 40,000 asylum seekers were given more rights despite arriving on small boats as ministers try to slash the backlog of cases.
Officials will now treat them the same as those who arrived through safe and legal routes.
A senior source branded it a “de facto amnesty as a means of processing more cases”.
Home Office figures showed that 172,758 people were waiting for an initial decision on asylum applications at the end of March, up 57 per cent from a year earlier and the highest figure since comparable records began in 2010.
Tens of thousands who arrived between June 28 and July 2023 will be allowed to stay in the UK for up to five years.
READ MORE: Sadiq Khan vows to fight plan to house migrants at docks
Previously, migrants who arrived illegally were put in “Group 2”, meaning they could only remain in the UK for 30 months. The Home Office introduced the “differentiation” last year to incentivise migrants not to pay people smugglers thousands to reach the UK.
Refugees classed as “Group One” are “normally” granted permission to stay for five years and can apply for their families to come to the UK.
They have “immediate and unrestricted access to the labour market” and have “full access” to the family reunion route to bring their families to the UK once their asylum application is successful.
A source said: “Losing the differentiation aspect between those who come through safe routes and those who do not does not look like getting a grip of the system or having a strong deterrent.”
But a Home Office source described it as an “administrative change” to avoid staff wasting time separating applicants.
Immigration minister Robert Jenrick said: “The differentiation policy was intended to disincentivise migrants from using criminal smugglers to facilitate illegal journeys to the UK.
“This was the right approach. Since then, the scale of the challenge facing the UK, like other countries, has grown – and that is why the Government introduced the Illegal Migration Bill.”
Under the Government’s new Illegal Migration Bill, asylum claims from migrants who arrive on small boats will be thrown out.
Ministers insisted the only “humanitarian route” into the UK is through a safe and legal route.”
Mr Jenrick said: “This approach represents a considerably stronger means of tackling the same issue that the differentiation policy sought to address: people making dangerous and unnecessary journeys through safe countries to claim asylum in the UK.
“We will therefore pause the differentiation policy in the next package of Immigration Rules changes in July 2023.”
In another move to slash the asylum backlog, the Home Office has also expanded a “streamlined” application process.
This will apply to people from Afghanistan, Eritrea, Libya, Syria, Yemen and Sudan. Case workers will be able to approve applications without a further review.
But Enver Solomon, CEO of the Refugee Council, said: “It’s the right decision to pause the differentiation policy that treats refugees based on how they got to the UK rather than on their need for protection.
“The Government is now admitting that its flagship Nationality and Borders Act has failed to deliver. As was predicted by us and other refugee organisations, it hasn’t deterred desperate men, women and children from taking dangerous journeys but has simply led to unnecessary misery for many refugees, leaving them stuck in limbo unable to move on with their lives.”
The cost of housing asylum seekers in hotels is running at almost £7m a day.
The controversy comes as a fresh row broke out between the Government and the Mayor of London Sadiq Khan.
The Labour Mayor called for Home Secretary Suella Braverman to rule out plans for a barge to be moored in London.
Mr Khan, in a letter to Mrs Braverman, said: “We were recently approached by the Home Office asking to use the Royal Docks as a location for a barge.
“To be clear, these plans would be unsafe and unworkable and they risk the health and wellbeing of highly vulnerable people.”
The Bibby Stockholm is due to arrive in Dorset in the next two weeks. It will eventually be used to house around 500 young male asylum seekers.
But police were spotted preparing for a riot on board the vessel, with officers boarding it using rope ladders.
A witness, who wished to remain anonymous, said: “The officers were dressed all in black and they all emerged from an old warehouse that looked like it had been abandoned.
“They marched to their boats in full gear and then they sped off towards the harbour entrance like they were practising approaching from that side.
“I couldn’t see them for a moment and then they zoomed at the ferry at full speed and surrounded it.
“It looked like they were practising raiding it.”
