Osborne in migration target warning
George Osborne appears to have admitted defeat on the Tory pledge to bring annual net immigration below 100,000 by the general election.
The Chancellor said progress had been made on reducing numbers, but suggested Britain's relationship with the EU would need to be renegotiated after May 2015 to deliver David Cameron's promise.
He also warned that border controls will be loosened again if Labour returns to government next year.
Official figures showed net migration - the number coming to the UK for at least a year, minus the numbers leaving - rose 58,000 to 212,000 in the year to September 2013.
Mr Cameron has rejected calls to drop the target, arguing it is still "achievable" but refusing to offer a "cast iron guarantee".
Home Secretary Theresa May has conceded it has become "more difficult".
Interviewed for the Sun on Sunday, Mr Osborne suggested that the EU membership renegotiation - due to take place if the Tories win the general election - will have to be completed in order to bring immigration down to the tens of thousands.
"We've set out our ambition, we are committed to that ambition, and as you see with the Immigration Act now coming into effect we are delivering the actual changes that will help us control our borders and deliver that reduction in numbers that people in this country want to see," Mr Osborne said.
"So we have got our policy, we are delivering on the policy, and the key dimension to it which we need to now deliver on is the European aspect.
"That requires renegotiation of our membership of the EU, an in-out referendum so the British people have their say.
"The point that people need to focus on is that a general election is not a free hit, it matters who the Government is.
"If there's a Labour government not only will the economy go to ruin but the borders will be uncontrolled and you won't get that renegotiation in Europe because they're not even pretending that they want to do it."
On the by-election campaign trail in Newark, Mr Osborne insisted: "There needs to be a different set of rules than the ones Labour signed us up to when those countries in Eastern Europe joined, when there were no restrictions.
"We are saying, 'Look, for new accession countries you need to look at how free movement works.'"
Speaking to the Sunday Telegraph, Iain Duncan Smith also stressed the Government had made progress on immigration - which has been identified as one of the main factors in Ukip's strong performance in local and European elections.
But the Work and Pensions Secretary said "there remains an issue over Europe".
"Freedom of movement means that people can come in an out. Particularly now you have countries with lower GDP, there is a big pull factor to come into countries like ours," he said.
Mr Duncan Smith called for new rules to limit migration from the EU, and said Brussels should be stripped of control over who is entitled to state benefits in Britain.
Minister for Defence Personnel, Welfare and Veterans, Anna Soubry also expressed doubts about hitting the target.
Speaking on BBC One's The Andrew Marr Show she said: "We've reduced net migration, we know that we've reduced that, but... it doesn't look at the moment as if we're going to achieve it, but that doesn't mean to say that we aren't right in trying to achieve it and we've made that absolutely clear."
She added: "But I think that's not the argument. The real argument is making sure that people understand the value of immigrants in our country, but we've got to make sure that we are doing things properly in a planned way."
Shadow immigration minister David Hanson said: "George Osborne has finally admitted the Government will fail to meet its own net migration target, despite David Cameron's 'no ifs, no buts' promise.
"His claims about Labour are just a smokescreen of desperate falsehoods to divert attention from the Government's failure.
"This Government's record has been a fall in criminal deportations, a weakening of border control and a failure to tackle exploitation at work which can undercut local wages and jobs.
"At the same time their target obsession has driven away valuable university students and investment opportunities.
"George Osborne is left misleading people about Labour's plans when it is his Government that has failed to listen to our calls for stronger border controls and enforcement, refused to tackle illegal immigration and failed to meet its own target.
"Labour is calling for stronger border controls to stop illegal entry but the Government is failing to introduce them. A future Labour government would bring back fingerprinting of illegal immigrants at Calais, and introduce proper in-out checks so visas can be enforced.
"We also need to strengthen future controls for new EU accession countries, require people to be in the UK for longer before they can access benefits and to deport those who break our laws."
Speaking on the BBC's Andrew Marr Show, former Liberal Democrat leader Lord Ashdown signalled that the party was likely to block Tory proposals for tightening immigration rules - thought to include restrictions on employing cheaper foreign workers and provision to deport unemployed Europeans after six months.
"It is unlikely that we will let those go through. But let's have a look," Lord Ashdown said.
He added: "Immigration is intensely valuable to Britain... we have benefited hugely from immigration in this country."
Ms Soubry said some people she saw with concerns about immigration were "frankly racist".
"When you make the case with people who come and see me in my constituency surgery who say I'm really worried about immigration. You say really, why? This is Broxtowe. We don't have a problem with with immigrants," she said.
"When you explain all that to them they get it. Not all of it. Some people have prejudices, some people are frankly racist, but there are many who just don't know the argument."