No 10 has said rules allowing EU nationals to live and work freely in the UK will end in the event of a no-deal Brexit at the end of October.
Theresa May’s government had considered extending freedom of movement to 2021 or allowing EU citizens to stay in the UK for three months before having to apply for a longer stay.
However both those options have now been dropped, in favour of a new approach which will be set out later.
About 3m EU citizens live in the UK.
Freedom of movement allows EU citizens to live and work in other European Union countries.
Asked about the issue, Prime Minister Boris Johnson said the UK would not “become remotely hostile to immigration or immigrants”.
He added that “immigration into the UK will be democratically controlled.”
A Downing Street spokeswoman reiterated the government’s desire for an Australian-style points-based system.
She also added that “tougher criminality rules” for those coming to the UK will be introduced.
Under the withdrawal agreement, negotiated by Theresa May, freedom of movement would have stayed for a two year transition period.
However MPs repeatedly voted down Mrs May’s deal and unless an agreement can be reached the UK will leave without a deal on 31 October.
In a no-deal scenario, those EU citizens with the right to permanent residence in the UK – which is granted after they have lived in the UK for five years – should not see their rights affected.
EU nationals who are already in the UK would be unaffected and can apply for settled status or pre-settled status in the same way as now.
‘Irresponsible and reckless’
The Lib Dems’ home affairs spokesperson Sir Ed Davey accused the government of being “irresponsible and reckless”.
He said “employers up and down the country won’t know what the law is”, adding “this will hugely increase the damage cause by a no-deal Brexit.”
Director of the Migration Observatory Madeleine Sumption said ending freedom of movement could “simply mean ending the role of EU law in governing the rights of EU citizens here and replacing it with UK law”.
However she said it could also mean introducing a new “substantially more restrictive” system.
She said it would be “quite difficult” to enforce any new rules before the process of registering those EU citizens who have already been living in the UK for years has been completed.
BBC home affairs correspondent Danny Shaw said the logistics of the new scheme still had to be worked out.
“You’ve got to remember this: 40 million people arrive from the EU, EU nationals, every year into the UK. So for the ports and airports that will mean enhanced checks if freedom of movement rules are abolished straightaway and that will put quite a burden on the staff working at Britain’s ports and airports.”