Theresa May faced an angry backlash from business leaders, charities and political opponents as she announced a sharp tightening of rules for asylum and immigration.
In a hard-hitting speech to the Conservative Party conference in Manchester, Mrs May declared the UK "does not need" large numbers of foreign arrivals, warning they are putting British workers out of a job, forcing down wages and making it impossible to create a "cohesive society".
But the Institute of Directors accused her of "vilifying" migrants for party political reasons, and branded her claims about their impact on the economy as "nonsense".
Mrs May's speech was widely perceived as a pitch to be the right-wing choice to replace David Cameron in an eventual succession battle, on a day when London mayor Boris Johnson reasserted his position as the darling of the party's one-nation wing with a well-received and joke-packed address.
Urging party members to "put Britain first", the Home Secretary said she would act to reduce the numbers gaining asylum after arriving in the UK and to make sure overseas students left the country after their courses.
But the IoD accused her of jeopardising Britain's economic recovery with "irresponsible rhetoric and pandering to anti-immigration sentiment".
Director general Simon Walker said: "It is yet another example of the Home Secretary turning away the world's best and brightest, putting internal party politics ahead of the country, and helping our competitor economies instead of our own.
"The myth of the job-stealing immigrant is nonsense. Immigrants do not steal jobs, they help fill vital skill shortages and, in doing so, create demand and more jobs."
Mr Walker called on political leaders to "stop vilifying migrants and acknowledge the hugely important contribution they make to this country's economy".
In a hardening of Tory rhetoric, Mrs May took on claims that the UK is a country of immigrants, instead arguing it has had "remarkable population stability" until recently.
Her proposals for asylum mark a major departure from the system Britain uses to offer refuge for those fleeing conflict and persecution around the world and appear to be aimed at reducing the numbers coming to the country
They include major reforms such as deporting refugees if their home countries become safe by the time their temporary leave to remain in Britain ends, in a process described by Mrs May as "safe return reviews".
In addition, those who have travelled through safe countries such as the thousands crossing Europe from the Middle East and North Africa will be given the "minimum stay of protection" and "no automatic right" to live in the UK while the most vulnerable, such as the 20,000 due to arrive from camps neighbouring war-torn Syria, will be offered a longer stay.
The Home Secretary also promised to take "retaliatory measures" against countries which refuse to accept people being deported from the UK by denying their nationality and use "alternative documentation" which exists for anyone who first entered the UK on a genuine visa to prove a deportee's identity.
Mrs May said Britain would end the "absurdity" of EU nationals claiming asylum, alleging that the relatively small number of 551 claims in the last five years has cost taxpayers £4 million.
And she called for discussions in Europe and the United Nations to look at the legal definitions of asylum and refugee status, established in the 1951 Geneva Convention.
The Home Secretary said the measures would allow Britain to focus on being a "beacon of hope" to vulnerable people in genuine need of sanctuary, telling delegates: "There are people who need our help, and there are people who are abusing our goodwill - and I know whose side I'm on."
And she said: "We need to distinguish carefully between economic migrants and genuine refugees. We have to be a country in control, stricter with people who try to abuse the system so that our help is not denied to those who need it."
Liberal Democrat leader Tim Farron accused Mrs May of "encouraging division and hatred", while Labour's shadow home secretary Andy Burnham said she had forgotten her own advice that the Tories should stop being "the nasty party".
"In her desperation to boost her stock amongst the Tory faithful, the Home Secretary delivered a misleading and narrow-minded speech which fails to provide any real answers to the challenges we face," said Mr Burnham.
But she was defended by Mr Cameron, who told the BBC: "She's right... A strong and cohesive society needs immigration to be properly under control and our view at the moment is that it is too high."
The Prime Minister said Britain's successful multi-ethnic society was a matter of "huge pride". But he said he was "frustrated" at his failure to meet his target of reducing net migration to the tens of thousands.
"Of course people who come here are economically productive," Mr Cameron told Channel 4 News. "Many people who come here are working and are contributing.
"The point Theresa was making in her speech is that you do have to look at all the economic arguments around migration and we have to accept - and sometimes frankly the elites don't accept - that when you get a lot of unskilled migration that can hold down or drive down wages.
"That can have an affect on some of the poorest and hardest-working people in your country."
Refugee Council chief executive Maurice Wren said: "The Home Secretary's clear intention to close Britain's border to refugees fleeing for their lives is thoroughly chilling, as is her bitter attack on the fundamental principle enshrined in international law that people fleeing persecution should be able to claim asylum in Britain.
"The Home Secretary's idea that the few refugees who reach Britain's shores under their own steam are not in need of protection is fundamentally flawed. Becoming a refugee is not solely the privilege of the poor or infirm."