Government fears backlash over legal migration

Tony Blair is to consider expanding legal migration into Britain as a way of tackling skills shortages and boosting economic growth.

Ministers believe that allowing more people to settle legally could help to stem the flow of illegal immigrants into Britain. But they are nervous about being seen as "soft" on immigration, and will insist on strict rules to prevent the planned new migration scheme being abused.

Next month, the Government will expand its highly skilled migrants programme . It also plans to lower the qualifications criteria for migrants seeking lower-skilled jobs in sectors with shortages, such as hospitality and construction. But some ministers believe that a much wider expansion is needed. One said: "This is a big coming issue - but it's a highly sensitive one."

Mr Blair wants the issue to be addressed by the European Union and the wider international community. It will be high on the agenda when he hosts a conference of leading centre-left politicians from around the world in London next weekend.

The Progressive Governance conference will consider the experience of countries such as Canada, which have large migration programmes.

Goran Persson, the Swedish Prime Minister, will call for the EU to adopt a new strategy to "allow those who want to contribute and work in Europe to do so". Writing in the conference's journal, he warns that demographic changes mean that growth will stall unless the EU opens its borders.

Mr Persson writes: "In many European countries, right-wing populists have gained political support on xenophobic messages built on prejudice and the scapegoat mentality. Unless we manage to persuade the voters that economic migration will be a prerequisite for welfare and wealth - that they will contribute, not be a burden - initiatives to promote this could become counter-productive. They would lead to larger support for populist parties and calls for restrictive policies to close borders."

Peter Mandelson, the former cabinet minister who is organising the conference, writes in the journal: "We should open new channels for legal migration and restrain channels unrelated to labour market needs. We should ensure that new rights and duties mark the life of permanent migrants, while resolutely defending tolerance and respect for 'otherness' in societies that will become more culturally diverse."

Migration is one of seven policy areas to be debated at the conference, which will be followed by a summit of the leaders without their advisers a week today. The others are public services; welfare reform; science; corporate governance; citizenship and global security.

Organisers hope the event will heal wounds left by the Iraq war, which split centre-left leaders and parties. Javier Solana, the EU's foreign affairs supremo, will propose a new "world order" aimed at bridging the divide between the EU and the United States. Mr Solana will argue that the best way for the US to preserve its position as a benign world power is by upholding the rule of law. He will say: "We must be prepared to use sticks, but do we want a return to the politics of the caveman, where the guy with the biggest stick carries the argument?"