The new test is being introduced in spite of warnings from Mr Lilley's own social security advisers that the price may be too high.
It may damage community relations and deter genuine claims from black and Asian citizens who would face the test on returning from extended visits to families abroad, the Social Security Advisory Committee said. The administrative costs may also outweigh benefit savings that the Department of Social Security yesterday admitted it could not define with any precision.
Mr Lilley said: 'In recent summers we have seen a growing number of European nationals taking advantage of the accessibility of our benefit system to spend a few months in Britain at taxpayers' expense. Most other European countries do not permit this kind of behaviour.'
The test, which affects claims for income support, housing benefit and council tax benefit, follows several highly publicised cases last summer where people at language schools, or simply on extended holiday, were found to be claiming benefit. Mr Lilley vowed to clamp down on 'benefit tourism' in a speech at last year's Tory party conference that critics called xenophobic.
He has agreed to exempt Irish people from the benefit bar, after warnings from his advisory committee that the proposals, as originally framed, ought not to go ahead. Returning UK nationals, however, including those from ethnic minorities, will have to pass the residence test.
Claude Moraes, director of the Joint Council for the Welfare of Immigrants, said: 'Peter Lilley is scapegoating foreigners for dubious political gains. The whole thing is a farce that will save very little money.'
The Department of Social Security said Home Office figures suggested that 5,000 European Union nationals claimed an estimated pounds 7m in benefits last year. However, the advisory committee said there was no suggestion that all of those were 'benefit tourists' and Mr Lilley has conceded that 'the precise size of the current abuse cannot be determined'.
The committee said: 'The costs of administration and the aggravation and anxiety caused for the many claimants who would be required to face the test and would do so successfully, but who were never the intended target of the proposals, may well turn out to be too high a price to pay in order to provide a solution to a relatively small issue.'
Mr Lilley argued that while only a few thousand may be abusing the system 'if we were not to close this loophole it would grow'.
Tiago Costa Amorem, a heroin addict, who has not worked since coming to Britain from Portugal a year ago and is staying rent-free at the Hyde Park International Hotel, in central London, was jailed yesterday for four months at Horseferry Road Court, central London for theft and assualt.Reuse content