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An amnesty for 300,000 illegal immigrants living “in the shadows” in London was today proposed by Labour mayoral hopeful David Lammy.

He said it was time to bring them into mainstream society so they could pay taxes and enjoy more secure lives. The Tottenham MP pointed to a GLA report that estimated illegal immigrants working illicitly in London could contribute up to £600 million each year in taxes if they were brought into the regular economy.

Other countries had tried similar policies successfully, including Spain — which has legalised 1.2 million people since the mid-Eighties. Critics will say the proposal could increase the queues of migrants trying to get into the UK illegally — and Downing Street rejected the idea. A spokesman said: “I do not think that is something that the Government is considering.”

However, Mr Lammy said it made no sense to carry on with the same policies for people who have lived in the UK for five years or more and already have jobs and homes to live in.

“We face a choice,” he said. “We can continue to stick our heads in the sand and pretend this isn’t a problem, carry on letting these people live in the shadows and use our services without contributing to them in tax.

“Or we can do the sensible thing and have an amnesty on all illegal immigrants in London who have been here for more than five years and are in work.”

Mr Lammy said he would “push from day one” for the idea if he is elected Mayor of London next year. He added: “It wouldn’t create new pressures on housing because these people are already living here. It wouldn’t mean fewer jobs because most of these people are already in work.

“It would just mean a much greater tax income, more transparency about who is living in our city, and a group of people who live here and work here being accepted as part of our city.”

He is among six Labour rivals bidding to be the party’s candidate.

Dame Tessa Jowell had a boost today when Leyton and Wanstead MP John Cryer, the influential chair of Labour MPs, said: “I’m proudly supporting Tessa because London desperately needs a Labour Mayor. Tessa can beat the Tories and work with trade unions and other groups.”

Diane Abbott was backed by an anti-cuts pressure group at the weekend and by student leaders who said their members “need a Mayor who will inspire us”. She said: “It is essential that the next Mayor of London takes a stand against austerity and the social cleansing of our city.”