Theresa May has signalled she is preparing for a fight with Brussels over its demands that EU citizens should be able to secure full residence rights in the UK during the Brexit transition period.

Ms May said she is “clear” that there should be a difference in the rights afforded to people who arrived in the UK before the expected March 2019 Brexit date and those who come afterwards.

She made her comments after the EU set out its demands for the two-year transition period, including the one which would increase the number of EU citizens who can win UK residency rights after Britain officially quits the bloc.

But a group representing EU citizens immediately warned that her stance would bring “utter chaos” and inflict “widespread discrimination” in their search for jobs and homes.

​MPs on the Conservative Party’s right wing are even more annoyed by the proposal, because they believed the matter had been settled in the “withdrawal” phase of Brexit talks, which reached agreement at the end of 2017.

Addressing the growing dispute while travelling to China on a trade visit, Ms May said: “I’m clear there’s a difference between those people who came prior to us leaving and those who will come when they know the UK is no longer a member of the EU.”

She explained: “When we agreed the citizens’ rights deal in December, we did so on the basis that people who had come to the UK when we were a member of the EU had set up certain expectations, they made a life choice and … it was right that we have made an agreement that ensured they could continue their life in the way they had wanted to.

UK will be worse off in every possible scenario after Brexit, concludes leaked Government analysis

“Now for those who come after March 2019 that will be different because they will be coming to a UK that they know will be outside the EU.”

Conservative MPs who want a clean break from the EU have been demanding Ms May take a tougher line on Brexit, while Labour has been questioning whether she can achieve a deal at all.

With her leadership once again under pressure as negotiations heat up, Ms May insisted that people should not underestimate her ability to secure an agreement for the transition.

She said: “I kept reading before the December deal was done that we weren’t going to be able to do a deal, that we weren’t going to manage to do a deal, that we weren’t setting the right things out and so forth.

“We did that deal. We did an agreement which when everybody looked at it, business said this gives us more certainty, citizens saw that their rights were being protected.”

She dismissed speculation that she had been forced to cancel a speech setting out her terms for the transition and Brexit end state because of a lack of consensus over key areas within her Cabinet.

Brexit so far: in pictures Show all 53 1 /53 Brexit so far: in pictures Brexit so far: in pictures Brexit campaign Boris Johnson led the VoteLeave campaign PA Brexit so far: in pictures Brexit campaign Boris Johnson MP, Labour MP Gisela Stuart and UKIP MP Douglas Carswell address the people of Stafford in Market Square during the Vote Leave Brexit Battle Bus tour on 17 May 2016. Their lead line on the tour was: “We send the EU £350 million a week, let's fund our NHS instead.” Getty Brexit so far: in pictures Voting day A man shelters from the rain as he arrives at a polling station in London on 23 June 2016. Millions of Britons voted in the referendum on whether to stay in or leave the European Union AFP/Getty Brexit so far: in pictures Referendum results Leader of Ukip, Nigel Farage, reacts at the Leave EU referendum party at Millbank Tower in central London as results indicated that it was likely the UK would leave the European Union AFP/Getty Brexit so far: in pictures Protesting the result A young couple painted as EU flags and a man with a sign reading “I’m not leaving” protest outside Downing Street against the voters decision to leave the EU on 24 June 2016 Getty Brexit so far: in pictures David Cameron resigns British Prime Minister David Cameron resigns on the steps of 10 Downing Street on 24 June 2016 after the results of the EU referendum were declared and the United Kingdom voted to leave the European Union Getty Brexit so far: in pictures Theresa May Becomes the new Conservative Party leader Theresa May receives a kiss from her husband Philip, after becoming the new Conservative Party leader on 11 July 2016. May became Prime Minister two days later and although she voted to remain in the referendum was keen to lead Britain’s Brexit talks after her only rival in the race to succeed David Cameron pulled out unexpectedly. May was left as the only contender standing after the withdrawal from the leadership race of Andrea Leadsom, who faced criticism for suggesting she was more qualified to be prime minister because she had children AFP/Getty Brexit so far: in pictures Lancaster House keynote speech on Brexit British Prime Minister Theresa May delivers her keynote speech on Brexit at Lancaster House in London on 17 January 2017. Where she spoke about her offer to introduce a transition period after the UK formally leaves the European Union in March 2019. Despite repeating the pro-Brexit mantra of “no deal is better than a bad deal”, the Prime Minister claimed she wanted a “tone of trust” between the negotiators and said Britain was leaving the EU but not Europe. She said there should be a clear double lock needed for the transitional period to make sure businesses had time to prepare for changes to their trading relationships with the EU Getty Brexit so far: in pictures Triggering of Article 50 British Prime Minister Theresa May in the cabinet, sitting below a painting of Britain's first Prime Minister Robert Walpole, signs the official letter to European Council President Donald Tusk invoking Article 50 and the United Kingdom's intention to leave the EU on 29 March 2017 Getty Brexit so far: in pictures Gibraltar nonsense Tensions have risen over Brexit negotiations for the Rock of Gibraltar. The European Council has said Gibraltar would be included in a trade deal between London and Brussels only with the agreement of Spain. While former Conservative leader Michael Howard claimed that Theresa May would be prepared to go to war to protect the territory. Spain's foreign minister stepped in only to assert that there was no need for the dispute Getty Brexit so far: in pictures Shock snap election Soon after triggering Article 50, Theresa May called on 18 April 2017 for a snap general election. The election would be on 8 June and it came as a shock move to many, with her reasoning to try to bolster her position before tough talks on leaving the EU AFP/Getty Brexit so far: in pictures Dissolution of Parliament for General Election Campaign Prime Minister Theresa May makes a statement in Downing Street after returning from Buckingham Palace on 3 May 2017. The Prime Minister visited the Queen to ask for the dissolution of Parliament signalling the official start to the general election campaign Getty Brexit so far: in pictures Conservatives lose parliamentary majority An arrangement of British daily newspapers showing front page stories about the exit poll results of the snap general election. British Prime Minister Theresa May faced pressure to resign on 9 June 2017 after losing her parliamentary majority, plunging the country into uncertainty as Brexit talks loomed. The pound fell sharply amid fears the Conservative leader would be unable to form a government AFP/Getty Brexit so far: in pictures Labour gains Britain’s opposition Labour Party leader Jeremy Corbyn gives a tumbs up as he arrives at Labour headquarters in central London on 9 June 2017 after the snap general election results showed a hung parliament with Labour gains and the Conservatives losing their majority AFP/Getty Brexit so far: in pictures Brexit negotiations begin Brexit Minister David Davis and European Commission member in charge of Brexit negotiations Michel Barnier address a press conference at the end of the first day of Brexit negotiations in Brussels on 19 June 2017 AFP/Getty Brexit so far: in pictures May speaks in Florence British Prime Minister Theresa May speaks on 22 September 2017, in Florence. May sought to unlock Brexit talks after Brussels demanded more clarity on the crunch issues of budget payments and EU citizens' rights AFP/Getty Brexit so far: in pictures EU council summit – insufficient progress German Chancellor Angela Merkel joins other EU leaders for a breakfast meeting during an EU summit in Brussels on 20 October 2017. The EU spoke about Brexit and announced that insufficient progress had been made AFP/Getty Brexit so far: in pictures DUP derails settlement on the withdrawal part of Brexit DUP Deputy Leader Nigel Dodds walks off after speaking to members of the media as a protester holding flags shouts after him outside the Houses of Parliament on 5 December 2017. British Prime Minister Theresa May was forced to pull out of a deal with Brussels after the DUP said it would not accept terms which see Northern Ireland treated differently from the rest of the UK Getty Brexit so far: in pictures May suffers defeat over EU (Withdrawal) Bill Theresa May suffers defeat in parliament over EU (Withdrawal) Bill on 13 December 2017. The Government was defeated by Conservative rebels and Labour MPs in a vote on its key piece of Brexit legislation. MPs amended the EU (Withdrawal) Bill against Theresa May's will, guaranteeing Parliament a “meaningful” vote on any Brexit deal she agrees with Brussels. Ms May's whips applied pressure on Conservative rebels who remained defiant in the Commons throughout the day and in the end the Government was defeated by 309 votes to 305 Brexit so far: in pictures EU council summit – sufficient progress Britain's Prime minister Theresa May arrives to attend the first day of a European union summit in Brussels on 14 December 2017. European leaders discussed Brexit and announced there was finally sufficient progress at the end of the two days AFP/Getty Brexit so far: in pictures The game moves to transition Brexit Secretary David Davis gives evidence on developments in European Union divorce talks to the Commons Exiting the EU Committee in Portcullis House, London, on 24 January 2018 PA Brexit so far: in pictures Trade deal is what May wants French President Emmanuel Macron gestures to Britain's Prime Minister Theresa May after they hold a press conference at the Royal Military Academy, Sandhurst, on 18 January 2018. May and Macron agreed a new border security deal, through which the UK will pay more to France to stop migrants trying to reach British shores on 18 January 2018 AFP/Getty Brexit so far: in pictures Transition period agreed The UK and EU agree terms for Brexit transition period on 19 March, 2018 Reuters Brexit so far: in pictures No agreement on Irish border The EU and UK however failed to reach an agreement on the Irish border during the successful talks on other Brexit issues AFP/Getty Brexit so far: in pictures EU attacks May’s ‘fantasy’ strategy For months after the March deal is struck there is little significant progress in talks. One senior EU official tears into Britain’s ‘fantasy’ negotiating strategy and accuses Theresa May of not even having a position on a variety of important issue Getty Brexit so far: in pictures UK releases Ireland plan Britain releases a new customs plan to solve the Northern Ireland border but Michel Barnier says it leaves ‘unanswered’ questions and would not prevent a hard border EbS Brexit so far: in pictures Chequers plan agreed The cabinet agrees on a plan known as the "Chequers deal" on July 6 2018. The plan seeks regulatory alignment on goods and food, divergence on services, freedom from the European Courts of Justice and an end to free movement. Many were surprised that the hard Brexiteers of the cabinet would agree to this plan PA Brexit so far: in pictures Chequers plan sparks resignations Brexit Secretary David Davis and Foreign Secretary Boris Johnson and numerous ministers resign in the days following the Chequers agreement Reuters Brexit so far: in pictures Davis out, Raab in On 9 July, Dominic Raab replaces David Davis as Brexit Secretary. Raab is a keen Brexiteer and was a housing minister before taking over from Davis Reuters Brexit so far: in pictures Barnier's "deal like no other" EU chief negotiator Michel Barnier claims on August 29 2018 that they are prepared to offer Britain a trade deal like no other, though he stressed that they will not divide or change the single market to accommodate Britain AP Brexit so far: in pictures "My deal or no deal" In an interview on Panorama on September 17, the Prime Minister insists that any Brexit deal will be offered to the EU on her terms. She asserts this amongst continued attacks on her approach to Brexit by Boris Johnson and the European Research Group, headed by Jacob Rees Mogg BBC/Jeff Overs Brexit so far: in pictures EU leaders reject Chequers Quite the blow was dealt to the Prime Minister at a EU leaders summit in Salzburg on September 20. European Council President Donald Tusk stated that the Chequers deal "will not work" Reuters Brexit so far: in pictures May demands respect Following the rejection of her Chequers plan the day before, the Prime Minister voiced her anger that the EU had dismissed it without offering an alternative. She stated that “throughout this process, I have treated the EU with nothing but respect. The UK expects the same. A good relationship at the end of this process depends on it." Getty Brexit so far: in pictures People's Vote march As the People's Vote campaign and The Independent's Final Say campaign gain traction, 700,000 people turn out in London to demand a final say on the UK's Brexit deal on October 20 2018 PA Brexit so far: in pictures More resignations As the Prime Minister settles on a Brexit deal, Brexit secretary Dominic Raab resigns along with Work and Pensions secretary Esther McVey and many other ministers Getty Brexit so far: in pictures Final Say petitions delivered to Downing Street People's Vote supporting MPs Chukka Umunna, Justine Greening and Caroline Lucas and The Independent editor Christian Broughton deliver over a million signatures in favour of a People's Vote to the Prime Minister at 10 Downing Street on December 3 2018 PA Brexit so far: in pictures May delays vote On December 10, the Prime Minister delayed the vote on her Brexit deal as it was near certain not to pass through the Commons due to Tory rebels and lack of DUP support AFP/Getty Brexit so far: in pictures No confidence motion Tory MPs triggered a confidence vote in the Prime Minister on December 12. She won by 200 votes to 117 Reuters Brexit so far: in pictures Commons rejects the deal Following the delay, the Prime Minister's deal was rejected in the Commons by a historic 230 votes AFP Brexit so far: in pictures Corbyn tables a no confidence motion Following the rejection of the Prime Minister's deal, opposition leader Jeremy Corbyn tabled a motion of no confidence in the government, which the government won by a margin of 19 AFP/Getty Brexit so far: in pictures Plan B The Prime Minister won the support of the commons to return to Brussels to renegotiate the backstop on January 29. In the same sitting, MPs also voted against a no-deal Brexit in a non-legally binding motion PA Brexit so far: in pictures EU council president savages Brexit campaigners who failed to plan for departure: ‘Special place in hell’ There is a “special place in hell” for pro-Brexit campaigners who demanded Britain leave the EU without explaining how it should happen, Donald Tusk has said. The European Council president launched the scathing attack as he accused anti-EU campaigners of pushing for Brexit “without even a sketch of a plan how to carry it out safely.” Mr Tusk also dismissed suggestions that the EU could reopen negotiations over the controversial Northern Ireland backstop, dealing a blow to Theresa May‘s hopes of securing fresh concessions as she tries to get her exit deal through parliament. Speaking in Brussels alongside Irish taoiseach Leo Varadkar, Mr Tusk said: “I’ve been wondering what a special place in hell looks like for people who promoted Brexit without even a sketch of a plan how to carry it out safely.” He also tweeted the accusation moments later Getty Brexit so far: in pictures EU and UK announce talks to restart after Theresa May visits Brussels Both have agreed to restart Brexit talks to find “a way through” the deadlock in Westminster, following a visit by Theresa May to Brussels. In a joint statement the British government and European Commission said Ms May had had a “robust but constructive” meeting with president Jean-Claude Juncker, and that the pair would meet again before the end of the month. But the EU again refused to reopen the withdrawal agreement and its controversial backstop – with any negotiations expected to focus on the future relationship between the UK and EU instead Getty Brexit so far: in pictures Brexit strategy lost MPs voted down May's Brext plans, with a majority of 45. The prime minister did not appear in parliament to see another defeat PA Brexit so far: in pictures Labour and Conservative MPs resign and create the Independent Group Back row of Chris Leslie, Gavin Shuker, Chuka Umunna and Mike Gapes, middle row of Angela Smith, Luciana Berger and Ann Coffey and front row of Sarah Wollaston, Heidi Allen, Anna Soubry and Joan Ryan PA Brexit so far: in pictures Non-biding votes on amendments to Brexit motion On February 27 he house held a series of votes, unanimously calling for the UK and EU to guarantee citizens rights in a no-deal scenario AFP/Getty Brexit so far: in pictures Attorney General publishes legal advice A hammer blow for May as Geoffrey Cox said her renegotiated deal can still leave UK in backstop against its will. Mr Cox did say the prime minister’s efforts had reduced the risk of the UK being trapped in the backstop indefinitely. MPs went on to vote against her deal by 391 to 242 UK Parliament/PA Brexit so far: in pictures No-deal off the table MPs rejected a no-deal Brexit by 43 votes on March 13, with cabinet ministers rebelling in another humiliating defeat for Theresa May. A day later they voted in favour of the prime minister seeking an extension to Article 50 AFP/Getty Brexit so far: in pictures House speaker bans May from third Commons vote on same Brexit deal John Bercow sensationally told Theresa May he would stop her making another attempt to pass her Brexit deal unless she has secured changes. The Speaker said a further ‘meaningful vote’ would be ruled out of order if the motion was “the same or substantially the same’ – under an ancient convention to stop the government bullying parliament on issues MPs have rejected Parliament Live Brexit so far: in pictures May writes to Tusk The prime minister wrote to Donald Tusk, president of the European Council, to ask for a three-month extension to give her more time to try to get her deal through parliament. However the European Commission advises the EU27 should offer a short extension to May 23 or a longer one meaning the UK would participate in European elections 10 Downing Street/AFP/Getty Brexit so far: in pictures European Council summit Theresa May’s request to extend triggering Article 50 until the end of June was rejected by the EU, and instead offered a shorter time frame. She accepted the offer of a delay until May 22 if her withdrawal deal is approved by Parliament. If MPs rejected it for a third time, the EU said Britain must propose a new plan by April 12. Ms May said she will not support a long delay because it would mean Britain participating in elections for the European Parliament Getty Brexit so far: in pictures Brussels confirms preparations for a no-deal Brexit are completed They warned that it is “increasingly likely” the UK will crash out. In a statement the European Commission (EC) said “preparedness and contingency work”, which the EC has been conducting since December 2017, was now finished. The announcement came days after EU leaders agreed to a request by Theresa May to extend the UK’s Brexit date AFP Brexit so far: in pictures May resigns British Prime Minister Theresa May reacts as she delivers a statement in London, Britain, May 24, 2019. REUTERS/Simon Dawson SIMON DAWSON Reuters

Labour MP Peter Kyle, a supporter of Open Britain campaign for a soft Brexit, said the comments would simply increase uncertainty over Brexit for thousands of people living in the UK.

He said: “The Government says it values EU citizens who want to live in the UK, then tells them they’re not wanted. The Government tells businesses they want stability and continuity, then tells them their ability to recruit the staff they need will be hampered.

“Our economy must not be sacrificed on the altar of an extreme and counter-productive attitude towards immigration. If that’s what Brexit means, then everyone is entitled to keep an open mind about whether it’s the right path for the country.”

Nicolas Hatton, the founder of the3million group which represents EU citizens, warned that Mrs May’s policy would bring “utter chaos”.

“People won’t have the paperwork to prove they arrived in this country before March 2019,” he said.

“That means there will be widespread discrimination because employers and landlords will want to know whether that person can stay and will ask for that paperwork.”

However, Eurosceptic Conservative Nigel Evans welcomed the move as a ”red line” in the talks amid concern from some MPs that Ms May is preparing to deliver Brexit in name only.

He told The Independent: “I think this should be a wake-up call to [the European Commission’s chief negotiator] Michel Barnier and others that they cannot push us around.

“I believe that this clarity will not only be welcome to MPs who are supportive of the referendum result, it will also be welcomed by millions of people across the country who voted for Brexit.”

It is not the backdrop the Prime Minister would have wanted for her trip to China on which she is seeking to present an image of Britain’s bright and prosperous trading future after Brexit.

She travels to Wuhan, Beijing and Shanghai seeking to increase trade with China and ultimately boost her chances of securing an all-important trade deal that Brexiteers believe will help make up for lost business from Europe.

British exports are up 60 per cent since 2010 and China is expected to be one of the UK’s biggest foreign investors by 2020.