Theresa May set out a new Brexit red line last night as she vowed to fight Brussels over plans that could grant up to another million EU citizens the right to settle in Britain.

EU leaders accepted in December that migrants arriving after Britain leaves the bloc at the end of March next year should lose the automatic right to reside here.

But Brussels backtracked on the deal this week, saying the ‘cut-off date’ should be delayed until the end of the transition period – putting it back by about two years.

The MigrationWatch think-tank warned the ‘absurd’ move could result in up to a million more EU migrants winning the automatic right to live in the UK.

Speaking to reporters on a trip to China, the Prime Minister vowed to fight the proposal during negotiations with the EU on the details of the transition period

Speaking to reporters on a trip to China, the Prime Minister vowed to fight the proposal during negotiations with the EU on the details of the transition period.

Mrs May also took a thinly veiled swipe at Philip Hammond’s vision of a status-quo Brexit. The Chancellor enraged Eurosceptic MPs when he suggested leaving the EU would result in only ‘very modest’ changes.

Mrs May flatly contradicted him yesterday, saying people ‘did not vote for nothing to change when we come out of the EU’. In an upbeat assessment, she said Britain’s economy would have a ‘better future’ outside the EU, but she could not accept the idea that EU migrants arriving after we have left should be granted the automatic right to stay here permanently.

Mrs May said it was right to offer guarantees to the 3.2 million EU citizens who had made their home here, because they had ‘made a life choice’ based on the UK’s EU membership. But she added: ‘For those who come after March 2019, that will be different because they will be coming to a UK they know will be outside the EU.’

Guy Verhofstadt, the European Parliament’s chief Brexit negotiator, has warned it would be an unacceptable curb to free movement if EU citizens arriving in Britain during the transition period were not granted automatic residency.

But ministers insist free movement will technically end in March 2019 anyway when Britain leaves the EU.

Guy Verhofstadt, the European Parliament’s chief Brexit negotiator said citizens’ rights during the transition is not negotiable

In its place, Mrs May is proposing a temporary arrangement where EU citizens will be free to come and live and work in the UK during the transition. The only restrictions would be that they would have to register with the Home Office and – if she gets her way – they will not automatically qualify to live in the UK permanently.

Ministers are keen to secure agreement on a two-year transition by the end of next month in order to smooth Britain’s exit from the EU. But Mrs May insisted this did not mean they would simply give in to the EU’s demands.

‘This is a matter for negotiation for the implementation period,’ she said. ‘But 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.’

But Mr Verhofstadt said last night: ‘Citizens’ rights during the transition is not negotiable. We will not accept that there are two sets of rights for EU citizens.’

Mrs May also rubbished reports she is seeking to extend the transition period beyond ‘about two years’. ‘I’m very clear we are not talking about something that is going to go on and on,’ she said. ‘We’re leaving the European Union. There is an adjustment period for businesses – and indeed government – for changes that need to be made.’

EU officials last night said moving the cut-off date back was ‘non-negotiable’. Diplomats said the UK had no option but to accept free movement rules during the transition period and it was ‘inconceivable’ it could get around this. One added: ‘Expect the EU to remain very firm on this.’

Last night Mrs May faced fresh criticism from a member of her Brexit war Cabinet, who anonymously briefed The Spectator that the Government’s Brexit policy-making ‘looks worse from the inside than the outside’. The group includes Foreign Secretary Boris Johnson and Environment Secretary Michael Gove.