The new legislation would require private landlords to question tenants about their immigration status and force banks to check account applicants against a database of known immigration offenders.
The bill also proposes slashing the number of grounds on which migrants can lodge an appeal against deportation from the current 17 to just four.
This reform is seen as a response to the 12 years it took to deport radical cleric Abu Qatada from Britain to Jordan, a task the government finally completed in July.
Immigration minister Mark Harper said the changes would stop illegal migrants from taking advantage of public services, make it easier to remove people who are in Britain illegally and deter illegal immigrants from entering the country.
"The public expects and deserves an immigration system that is fair to British citizens and legitimate immigrants and tough on those who abuse the system and flout the law," Harper said at the unveiling of the new bill.
"Once more, headline-grabbing gimmicks trump tackling departmental delays, and public fears are stoked instead of calmed by putting the house in order," said Liberty's director Shami Chakrabarti.
Maurice Wren, chief executive of the Refugee Council, a charity which works directly with refugees and asylum seekers, said the new bill was "unworkable."
"Landlords and bank staff are not immigration officials and the types of documentation carried by asylum seekers and refugees is varied and complex," Wren said.
