Nick Clegg says the "twilight world of illegality" needs to be tackled

Home affairs spokesman Nick Clegg said those staying long-term should be able to apply for permanent residence.

But they should be required to fulfil a series of conditions, such as the ability to speak English, he said.

The Home Office said it had no plans for an amnesty and was removing a failed asylum seeker every half hour.

One can't simply carry on as the government and the Conservatives are doing, sticking one's head in the sand and saying, well, we'll deport them one day Nick Clegg Lib Dem home affairs spokesman

Mr Clegg told BBC Radio 4's Today programme that the problem of long-term illegal immigrants needed to be tackled.

"This, frankly, is just in recognition of the fact that, because of incompetence or mismanagement in the immigration system over many years, we have very large numbers of people who live in this kind of twilight world of illegality and, in many cases, exploitation in the workplace which we need to deal with," he said.

"One can't simply carry on as the government and the Conservatives are doing, sticking one's head in the sand and saying 'well, we'll deport them one day', because that's simply never going to happen."

It is not known how many illegal immigrants are in the UK, with estimates varying widely from 300,000 to 900,000.

Calls rejected

Last month, the Institute of Public Policy Research said such an amnesty would bring in �1bn in extra taxes and save costs of �4.7bn needed to deport people.

It urged Home Secretary Jacqui Smith to adopt the move, saying a large scale deportation would never happen.

The Home Office has repeatedly rejected calls for an amnesty.

We are doubling the budget for enforcement and we now remove a failed asylum seeker every half an hour Immigration Minister Liam Byrne

Immigration Minister Liam Byrne said there were no plans for an amnesty, which he described as "wrong".

"This has always been our position and remains the case," he said.

"In fact, we are doubling the budget for enforcement and we now remove a failed asylum seeker every half an hour.

"That is why the number of people claiming asylum in the UK is at the lowest level since 1993."

Skilled migrants

The government has also come under fire from MPs and peers over tighter rules which could force thousands of highly-skilled immigrant workers out of the UK.

Earlier this month, the joint Commons and Lords Human Rights Committee said changes last year to the Highly Skilled Migrants Programme (HSMP), which encourages workers such as doctors and scientists to come to the UK, breached human rights.

New applicants and applicants for visa extensions now have to take part in a points-based assessment and the committee said thousands offered permanent residence in the UK were now facing deportation, contrary to "fairness".

However, the Home Office said it had to guard against the "risk of abuse" and had to ensure those on HSMP visas were actually doing highly-skilled work.