New measures will make life for illegal immigrants in the UK "uncomfortable and constrained", the Home Office has announced.
Illegal immigrants could be denied free health care or have their driving licences revoked. Immigrants reaching the end of their visa will also be sent text message reminders to leave the UK.
Critics have accused the Home Office of relying on gimmicks, while migrants' rights group have expressed concern at some of the proposals.
Nevertheless, home secretary John Reid claims the new measures will be effective in tackling illegal immigration, while also addressing the exploitation of many immigrants.
Illegal trafficking and illegal employment need to be addressed at the same time, Mr Reid argued, claiming that biometric ID cards would play a role in this.
Mr Reid said: "Most people who come to this country wish to comply fully with our immigration laws, but where they don't we are committed to blocking the benefits and privileges that should only be enjoyed by those here legitimately.
"We will make it easier to obey the rules through enhanced checking services for employers and the introduction of a new system for managing migration requiring sponsors to support applications.
"This new approach will make life in this country ever more uncomfortable and constrained for those who come here illegally."
A raft of government agencies and departments will cooperate on the new initiative. Regional partnerships will be created to track down exploitative bosses, private sector landlords will be subject to fines up to £20,000 to tackle overcrowding and three NHS trusts will explore ways Immigration and Nationalist Directorate data can be used to ensure overseas visitors pay for care.
A text message reminder service will also be established, although the Home Office admits it is not sure how this would work.
The Liberal Democrats have dismissed the initiative for lacking in substance. Home affairs spokesman Nick Clegg said: "If tough rhetoric and gimmicks were enough to sort out our immigration system we would have the best in the world.
"John Reid himself has condemned his immigration department as unfit for purpose, yet now he is attempting to obscure that incompetence with more tough talk. Sending a text message is hardly going to stop someone from overstaying their visa.
The Conservatives claim that the latest measures are an admission of failure from a Home Office that has given up deporting illegal immigrants, "preferring instead to spam them with text messages."
Shadow home secretary David Davis asked whether someone living illegally in the UK would be worried about having a driving licence or not and reiterated the Conservatives' calls for a dedicated border police to track down and deport illegal immigrants.
"Yet again we see another pathetic attempt to grab a headline rather than address a problem. Instead of spin and bluster from ministers, the public deserve effective action," he concluded.