The rain lashed down and wind blew in fiercely over icy Baltic waters as Peter Skaarup stepped back on the Danish mainland off the ferry from Lindholm island. 'It's a very nice place,' he told me with a smile.

'If you go there you will see a very pleasant, quiet island. There are no cars. People will have a good time there.'

Skaarup, one of Denmark's most prominent politicians, sounded like a man selling a dream holiday destination.

Yet he was greeted by hundreds of local protesters holding handmade banners.

'Lindholm is for free birds, not humans in cages,' read one, while children wore T-shirts asking in freshly scrawled ink: 'What about our safety?'

Syrian refugees walk with their luggage near the village of Kliplev, Denmark, unhappy about their treatment

For Skaarup is parliamentary leader of the populist Danish People's Party (DPP). And the island he was visiting for the first time has split his nation over plans to turn it into 'Europe's Alcatraz' – an isolated fortress to dump dozens of rejected and criminal refugees who cannot be sent home.

This 17-acre scrap of land – home to a research station for animal diseases and a cemetery for infected carcasses – symbolises how a Scandinavian country once famed for liberalism and tolerance has become the toughest on refugees in Western Europe.

Denmark's immigration minister even posed with a cake on social media to celebrate passing her 50th law restricting migrants.

Recent measures include a ban on face veils, confiscating jewellery from refugees and designating 29 urban areas as 'ghettos' subject to special laws to control residents.

Other ideas debated by MPs include prohibiting ritual slaughter of animals for halal food and barring women teachers from wearing head-scarves.

One key politician has even proposed curfews and electronic bracelets for all children living in 'ghettos'.

Denmark is, like most Western nations, bitterly divided over migration. Many key voices argue there is urgent need for these harsh policies – driven by the DPP but embraced by mainstream parties on Left and Right – to defend Danish values.

'You can reduce this issue down to cries of racism and xenophobia but it is about complex issues of shared values going back generations,' said Mikael Jalving, a prominent political commentator.

'Denmark, Norway and Sweden were all very homogenous societies until recently.

We were people of one tribe with the same views on social justice and the welfare state. Once they were taken for granted but now we must be explicit.'

This 17-acre scrap of Lindholm symbolises how a Scandinavian country once famed for liberalism and tolerance has become the toughest on refugees in Western Europe

Yet others believe their cherished tolerance has been betrayed.

'We used to be one of the best countries in the world,' said Carolina Maier, parliamentary leader of the Alternative, a new pro-business green party.

'Now we see a slow, dangerous shift that has similarities to the 1930s with different laws for different people.'

At the heart of this surprising Scandinavian crackdown is hygge, the celebrated Danish idea of creating a warm atmosphere to share the good things in life with friends and neighbours that some feel is under threat from globalisation and migration.

The concept makes perfect sense when I enter the cosy fug of a community hall after the bitterly cold protest in Kalvehave, a little port that sits just a few miles from Lindholm. Women serve coffee and apple cake, a man in a wheelchair plays the organ and children play on the floor.

But these residents, many of whom left urban life for coastal serenity, are seething over a £94 million plan to turn Lindholm into a holding pen for up to 125 unwanted arrivals, including convicted killers and others who cannot be returned to unstable countries.

'If you are unwanted in Danish society, you should not be a nuisance to ordinary Danes,' wrote hardline immigration minister Inger Stojberg on Facebook.

'They are undesirable in Denmark and they must feel it!'

The refugees and migrants will be free to leave the island on its two ferries – one of which is called 'Virus' – yet face prison if they fail to check in daily with police after the centre opens in three years' time.

Some DPP figures also want to reduce ferry services.

'We really want these people to go home but this is the next best solution,' said Skaarup, whose party – the second biggest in parliament – devised the plan.

'We have to take precautions, especially if people commit violent crime and terror.'

Yet some rival politicians say this is a costly political stunt ahead of this year election designed to stoke fears, the UN has raised 'serious concerns' and Danish human- rights groups warn they may take legal action to stop the proposal.

Meanwhile, protesting local residents fear an influx of convicted refugees and migrants puts their quiet area at risk.

'It's just a scam,' said Mette Praem, 36, a foster mum from the neighbouring tourist island of Mon. 'It's scary for us and not been thought through.'

Others said the idea was inhuman.

'Even if you commit a crime you still deserve decent conditions,' said Charlotte Brandt, 64, a psychologist waving a banner painted with the red-and-white national flag.

'They talk about Danish values but if these are our values then I'm ashamed to be Danish.'

Yet what makes this plan to create a dumping ground for unwanted refugees on a remote island two miles off the coast so extraordinary is that it is happening in a country that until the turn of the century had Europe's most liberal refugee laws.

There was uproar in 2000 when another leading Danish minister complained about treating all cultures equally and proposed interning refugees who commit crimes on an island. She was denounced and ostracised for racism by Left and Right.

Now immigration minister Stojberg shows off her iPad screensaver showing one of the cartoons of the Prophet Mohammad from a Danish newspaper that caused global outrage 13 years ago – and even Social Democrats on the Left have fallen in line with her hostile policies.

The change in culture began in 2001 when a Right-wing coalition including the DPP took office.

The parties have held power ever since, except for a four-year interlude under Helle Thorning-Schmidt, the wife of British Labour MP Stephen Kinnock.

Then came the huge influx to neighbours Germany and Sweden in 2015 and, when pictures of bedraggled Middle Eastern refugees wandering down rural roads of their own country began appearing, it provoked impassioned debate and a nationalist backlash in Denmark.

The Danish government took advertisements out in Middle Eastern papers warning people against heading to Denmark and informing them of big cuts to benefits for arriving asylum seekers.

One town even told all council buildings, including schools and care centres, to serve pork – which cannot be eaten by observant Muslims.

Parliament also permitted police to take cash and valuables worth more than £1,000 from refugees to help fund their stay in the country, which led to international condemnation.

Chillingly, one officer was quoted as saying he would happily 'pull out the gold fillings from refugees' teeth' if ordered.

Another controversial law brought in last month forces all new citizens to shake hands with the officiating person at their naturalisation ceremony, clearly aimed at conservative Muslims who refuse on religious grounds to touch members of the opposite sex.

So although people of 'non-Western' origin make up almost 500,000 of Denmark's 5.8 million population, the country accepted only 2,365 refugees in 2017 compared with 27,000 in next-door Sweden.

It also, uniquely, refuses to accept UN quotas.

Among those backing the tough stance is Naser Khader, a Syrian-born MP who arrived 45 years ago and is the Conservative spokesman on immigration.

'We have a lot of my people in Denmark with a dishonest agenda,' he said.

Khader argues that many Arab refugees and migrants who claimed to be fleeing war were actually living in the Gulf states and believes Western countries should pick vulnerable people from camps in conflict zones rather than just accept those wealthy enough to reach their borders.

'I want to offer my children a society that is good and culturally cohesive,' he said. 'I love the Middle East but I don't want to see it in ghettos in Denmark.'

The designation of 'ghettos' of housing for about 50,000 low-income migrants is among the most controversial new measures, with its sinister echoes from history in a nation that famously saved almost all of its Jews during Nazi occupation.

Families living in them lose benefits if children older than one do not attend nursery – which is intended to force integration – while crime committed in the ghettos is punished with heavier sentences.

Some ghettos may also be partially bulldozed to break up communities.

This rattled even those such as Flemming Rose, the journalist responsible for the Prophet Mohammed cartoon crisis.

He has since become a global free speech campaigner and fierce critic of attempts to silence candid discussion on migration and social cohesion.

'It is great to have this debate, even such a tough debate,' said Rose.

'My fear is equality and freedom are the building blocks of democracy, so I am concerned by legal discrimination against anyone and limitations on free speech such as by imams.' The Danish government is vowing to thwart 'parallel societies'.

Lars Lokke Rasmussen, the prime minister, has made dark warnings that ghettos could 'reach out their tentacles' by fuelling gang violence and claimed they led to 'cracks… on the map of Denmark'.

Yet when I visited the housing estate Mjolnerparken in Copenhagen, one of these places seen as such a danger to Danish society, there was a noticeable lack of graffiti in the cluster of low-rise blocks, many bicycles were not locked and residents were unfailingly friendly. Several shrugged off the 'ghetto' image.

'There are some problems with youths hanging around but I've been living happily in this area for 20 years,' said Pakistani-born Mehnaz, 38, as she dismounted her bike.

'When you come to Denmark you should learn Danish and mix with Danes, but that doesn't mean you cannot be a Muslim also. For me, this is no problem.'

Yet Mohammad, a 23-year-old driver from the Palestinian city of Hebron, said he was moving to Sweden after struggling to bring his wife and son into the country.

'If I am honest I don't feel Danish because I don't have the same rights as they do.

'Why can I not live with my wife and son? I just want a normal life but they don't want any more Muslims here so they provoke all these fears over us,' he said.

Others from ethnic minorities and human-rights bodies complain the harsh rhetoric has sparked rising discrimination in jobs and housing.

Some Muslims also told me they get more hostile looks in the street – along with more smiles of support.

Yet the lack of anger over issues such as Lindholm and 'ghettos' drove Adam Holm, a prominent historian and journalist, to despair and led him to recently publish an excoriating polemic entitled The Denmark I've Always Feared.

'I am not a multicultural fanatic, quite the opposite, but they want us as a nation to go from a policy of open arms to clenched fists when it comes to receiving refugees and immigrants,' he told me.

His concerns are fuelled by his Jewish heritage.

'If we do not learn from the lessons of history, we are doomed to repeat its mistakes.

'The gravest mistake is creating a political climate in which people of certain ethnicities are classified as suspicious.

'This causes a massive split in our society and the coherence that once tied us together is rapidly falling apart.

'Denmark is disintegrating, not saving itself.'