Leaders in Europe will demand that Theresa May respects the right of EU nationals who have lived in the UK for five years to acquire permanent residence in the country, in a sign of growing anger over the perceived bureaucratic hurdles being put in their way.

The call will be made at a summit on Saturday, where the leaders of the 27 other EU member states are set to sign their negotiating guidelines, detailing Brussels’ opening position in the talks due to start in June.

The guidelines were amended by officials on Monday to strengthen demands over Britain’s €60bn divorce bill, open the door to further cooperation on EU-UK foreign policy and law enforcement, and add a call for transparency during the talks.

The member state officials have also included an extra clause on the legal position of EU nationals who have lived in the UK over a long period.

The EU document had always insisted on reciprocal guarantees “to safeguard the status and rights derived from EU law at the date of withdrawal”, but now says: “Such guarantees must be effective, enforceable, non-discriminatory and comprehensive, including the right to acquire permanent residence after a continuous period of five years of legal residence. Citizens should be able to exercise their rights through smooth and simple administrative procedures.”

Tim Farron, the Liberal Democrat leader, said the development was “an embarrassing rebuke to the prime minister”. Both the Lib Dems and Labour have said they would have unilaterally guaranteed EU citizens their rights ahead of negotiations, rather than treat them as bargaining chips, in a position attacked by the work and pensions secretary, Damian Green, on Tuesday as an “incoherent” negotiating strategy.

EU nationals currently automatically acquire permanent resident status after five unbroken years in the UK but concerns about the future in the absence of any guarantees have led to many people applying for formal permanent residency status documents.

May’s government has been accused of forcing applicants to fill in an arduous 85-page document, which includes the requirement that they report every single trip abroad during their time in the country, no matter how many decades they have been in the UK.

A series of cases have emerged where longstanding residents in the UK, or their children, have been subsequently denied permanent residency status cards, causing anger and anxiety.

The fears of EU nationals living in the UK have been heard loud and clear in Brussels. The European parliament’s taskforce on citizens’ rights, set up in response to those concerns, wrote to the prime minister this year seeking clarification of Britain’s intentions, and calling for EU nationals to be treated fairly and humanely.

In a letter to the taskforce, seen by this newspaper, the Home Office minister Robert Goodwill denied the UK was making it difficult for EU nationals, adding that Britain was “responding to the needs of EU citizens appropriately”.

Goodwill said that an applicant with a straightforward case would not need to fill out “more than a quarter of the form”, and that only six pages would require answers when an application was done online.

Regarding the decision by May not to offer any guarantees to the 3.4 million EU nationals in the UK before talks with Brussels begin in June, the minister added: “It has not been the UK insisting there be no negotiation before notification.”

The Dutch MEP Sophie in ‘t Veld, who formed the taskforce, accused Goodwill of being a “fantasist” and living in a “parallel universe”.

She said: “The substance of the letter I received from the UK authorities can only be described as rubbish. Their description of the application procedure is a complete fantasy and we have all the mails to prove it. UK ministers seem to be living in a parallel universe to those who are actually applying for residence and attempting to exercise their fundamental rights. The anxiety of millions of EU citizens does not appear to be very high on the priority list of Mrs May.”

The row emerged as it was claimed that the Home Office was also trying to discourage EU nationals from even starting applications. The claim was prompted by a new entry on the Home Office’s website that suggests to potential applicants: “If you’re planning to apply for a document just to confirm your status, you can sign up for email alerts instead.”

Colin Yeo, a leading immigration lawyer, said he believed the latest wording on the Home Office website suggested officials were struggling to cope with the number of applicants.

He said: “The Home Office has made a rod for its own back by refusing to guarantee EU citizen rights, telling everyone to prepare for a ‘no deal’ scenario and enforcing use of a complex application form requiring reams of paperwork to be submitted.

“Unsurprisingly, officials now find they are overwhelmed with work. Telling EU citizens to sign up for an email alert rather than applying for proof of residence is just not credible at this point.”

It has also been suggested that the British government may be seeking to gather data on EU citizens for the first time. Unlike almost every other country in Europe, there is no need for EU nationals to register for residence when they move to the UK, leaving the Home Office without a firm hold on who is in the country. The home secretary, Amber Rudd, has been reportedly instructed to address the gap in knowledge as a matter of urgency.