Thousands of rejected asylum-seekers are to be offered up to £3,000 each to return home voluntarily.
The move comes days after the Government missed a key promise over the number of asylum-seekers removed from Britain.
Under the scheme, failed claimants will be paid £500 as soon as they board a flight out of the country - the first time cash incentives have been paid to leave.
Another £1,500 will be available upon their return to their homeland, which could be paid in the form of cash or by directly meeting the costs of housing or education.
They will also be able to claim a further £1,000 of benefits "in kind" under an earlier scheme designed to pay for training or setting up a business, making a total package of up to £3,000 each.
The scheme, which will run on a pilot basis until the end of June, could cost the Home Office more than £1m a month.
But Tony McNulty, the immigration minister, insisted it represented good value for money compared with the average £11,000 cost of forcibly removing a failed asylum-seeker.
In a written statement to the Commons, he predicted that the scheme could boost the number of voluntary returns of asylum-seekers from 300 a month to 500 a month.
The scheme, which is being run on a pilot basis with the International Organisation for Migration, will only see payments made to would-be refugees who had arrived in Britain by last month.
A Home Office spokesman denied that the move could backfire by attracting asylum seekers under the impression that the initiative would be repeated at a later date.
Tony Blair promised in 2004 that the number of rejected asylum-seekers would exceed the total of unfounded new claims by the end of 2005.
Just over 7,700 asylum-seekers and their dependents claimed refuge in Britain in the third quarter of last year, while 3,935 failed asylum-seekers and their dependents were removed.
The Home Office now predicts that it will hit the Prime Minister's target by 28 February.
That still looks an ambitious goal, but a new system of tracking the departure of asylum-seekers from major ports may help to close the gap. The Home Office is also intent on increasing the number of enforced returns, controversially including to Kurdish-controlled northern Iraq.
David Davis, the shadow Home Secretary, said: "This may be a sensible move, but it has largely been brought about by the Government's failure to deport failed asylum-seekers."
Maeve Sherlock, chief executive of the Refugee Council, described the policy as sensible and humane. "Enabling people to return home by giving them financial help to rebuild their lives has to be better than enforced removals that often involve men, women and children being snatched without warning, locked in detention centres and then flown out in handcuffs," she said.
The Home Office is advertising the new scheme with mailshots to all 54,000 people receiving benefits and accommodation from the National Asylum Support Service. It will also be publicised in asylum detention centres and reporting centres.Reuse content