Shabana Mahmood has U-turned on her immigration crackdown following a Labour backlash.
The Tories said the home secretary had “capitulated” to her critics, including communities secretary Angela Rayner.
Mahmood had previously announced that workers who arrived in the UK on health and social care visas during the so-called “Boriswave” from 2022 would have to wait 15 years for permanent settlement.
Speaking in March, she said that without reform some 350,000 low-skilled workers and their dependants would qualify for Indefinite Leave To Remain (ILR) – and access to state benefits – over the next five years.
However, her plans came under fire, with Rayner describing them as “un-British”.
Energy secretary Miatta Fahnbulleh also refused to back the proposals seven times during an excruciating interview on Sky News.
In a statement to the Commons on Monday, Mahmood said that foreign care workers who meet their visa conditions and earn at least £25,000 a year will now only have to wait five years instead of 15 to gain permanent residency.
Foreign care workers who do not qualify for the five-year settlement will be able to apply for a new five-year visa, and then apply for settlement once it has been completed.
But refugees “who have not come by a safe and legal route” will have to wait 20 years for settlement, Mahmood told MPs.
The home secretary said: “People want to see an immigration system based on control, contribution, and which rewards those who play by the rules.
“These proposals are based on that principle and recognise the contribution made by overseas workers to our country.”
Shadow home secretary Chris Philp condemned Mahmood for watering down her original plans, a move he said will cost taxpayers £10 billion.
He said: “If the home secretary wants to face down her nemesis, the communities secretary, and implement her own plans, we will vote for them.
“But if she capitulates to the open borders left, her credibility as home secretary will not recover.”
Mahmood’s climbdown is likely to be enough to secure the backing of Rayner and Fahnbulleh, but it remains to be seen if it will prevent a rebellion by left-wing Labour backbenchers.
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