A furious backlash has erupted over proposals that could see businesses forced to reveal how many foreign workers they employ.
The move is part of a package of measures being considered as part of a bid to encourage companies to recruit local workers and reduce immigration.
Home Secretary Amber Rudd announced a consultation would be launched on possible new steps in her speech to the Conservative conference on Tuesday.
The suggestion that firms may have to reveal the proportion of their workforce which is from overseas drew fierce criticism.
The head of the British Chambers of Commerce (BCC) said the move would amount to a "badge of shame" for businesses struggling to meet skills demands in the UK.
Acting director-general of the BCC Adam Marshall said: "A lot of businesses would be saddened if they felt having a global workforce was somehow seen as a badge of shame.
"Companies do so much here in the UK to train up their workers and of course look for local hires before going to the overseas market, so I don't think they should be penalised for having to do so when they have specific skills needs."
Shadow home secretary Andy Burnham attacked the proposal, saying: "The idea of British companies producing lists of foreign workers runs counter to everything that this country has ever stood for.
"It would be divisive, discriminatory and risks creating real hostility in workplaces and communities.
"If the Government proceeds with legislation in this area, it will face the mother of all battles."
He added: "The tone of the Conservative conference has become increasingly xenophobic. Theresa May has presided over the return of the Nasty Party."
Tory MP Neil Carmichael, a supporter of the Open Britain campaign, said: "This unsettling policy would drive people, business and compassion out of British society and should not be pursued any further. People coming to the UK to work hard, pay their taxes and make a contribution to our society should be celebrated, not shamed.
"This kind of divisive politics has no place in 21st-century Britain."
Ms Rudd told BBC Radio 4's Today programme: "This is one of the things we're going to look at in the review.
"It's not something we're definitely going to do, it's one of the tools we're going to use as a review to see if we can use it as a way of nudging people to do better behaviour."
She added: "I fear there may be some (businesses) who aren't quite as constructive, and they're the ones we want to flush out here.
"What we're saying is 'Work with us, businesses, work with us to deliver on what we need to have', which is a more skilled, local labour force."
Under current rules employers have to undertake a resident labour market test if they want to fill a vacancy with a non-EU migrant, which requires them to advertise the post in the UK for 28 days.
In her speech to the Tory Party conference in Birmingham on Tuesday, Ms Rudd said a "tick-box" exercise has allowed some firms to get away with not training local people.
As part of the new drive to bring down immigration, universities could also face new restrictions on recruiting overseas students.
The Home Secretary confirmed the controversial aim of cutting net migration to below 100,000 still stands.
The figure - the difference between the number of people arriving and leaving - was running at an estimated 327,000 in the year to March.