The Mayor of London is to commission a study of a potential amnesty for illegal immigrants in the capital.
Boris Johnson said deporting thousands of people working illegally in the UK was "just not going to happen".
He told Channel 4 News that allowing long-term illegal immigrants to earn the right to stay would see "hugely increased" tax revenues.
Immigration Minister Phil Woolas said the suggestion was "naive" and would lead to more trafficking of people.
Mr Woolas said: "I think this is naive of the Mayor. His comments might start with the best of intentions but will lead to more people traffickers making more money and exploiting more vulnerable individuals."
Of the 700,000 illegal immigrants thought to be in the UK, about 400,000 are in London.
Mr Johnson said: "What I want to do is to commission a study by my own economics team here at the Greater London Authority into the possibility [of an amnesty]."
"We want to look in detail at what the economic impact of such an earned amnesty system would be."
He did acknowledged that illegal immigrants had broken the law and should "in principle" be deported but he added: "Unfortunately it is just not going to happen."
Mr Johnson said he did not want to encourage illegal immigration but said there were significant legal and financial obstacles to mass deportations. (Continues)