Sajid Javid has been told the UK's plans for a "settled status" scheme for European Union nationals do not yet meet the concerns of MEPs.
The Home Secretary travelled to Brussels for talks with senior MEP Guy Verhofstadt, who is leading the European Parliament's work on Brexit.
After the meeting, former Belgian prime minister Mr Verhofstadt said "we do not believe our anxieties have yet been sufficiently addressed" by the UK Government.
Mr Javid is due to publish details of the settled status scheme for EU nationals seeking to remain in Britain after Brexit before the Commons goes into summer recess at the end of July.
Mr Verhofstadt said MEPs remained concerned about the "technological shortcomings" of the planned app which will allow people to register for settled status - but reportedly does not work on iPhones or other Apple devices.
He said: "I welcome Mr Javid's response to the European Parliament's concerns about the Home Office's proposed registration procedure for EU citizens in the UK and related matters, but at this time we do not believe our anxieties have yet been sufficiently addressed.
"We reiterate our belief that the registration process should, as a matter of principle, be cost-free.
"It is unacceptable that citizens who were never consulted on Brexit should have to pay to retain their existing rights.
"MEPs remain concerned about the technological shortcomings of the proposed registration 'app' and the fact that any alternative is limited to sending passports by post only, the lack of clarity for vulnerable groups, the length of the process, the consequence of criminality checks and that families may not be able to register using one form."
Mr Verhofstadt said he and Mr Javid had "agreed to work closely together to get this right" and added that "as a parliament, we are united in the belief that neither EU citizens in the UK or UK citizens in the EU should be punished because of Brexit".