THE UK Government is "unlikely" to meet its immigration target, Home Secretary Theresa May has admitted for the first time, as David Cameron was warned that any attempt to ban EU migrants from claiming in-work benefits would be illegal.

The eagerly anticipated keynote speech on Europe by the Prime Minister in which he will set out the basis of his reform agenda is expected before Christmas but could come as early as this week.

For months, Mr Cameron has stuck to his "no ifs, no buts" pledge to get net migration down below 100,000 by the General Election. This was despite the fact that, instead of falling, it has been rising. New statistics on Thursday are expected to show the level of net immigration is still above 240,000 with just six months to go to the May 2015 poll.

The Home Secretary sought to accentuate the positive, stressing how non-EU immigration had been brought down to similar levels as at the end of the 1990s but she admitted: "It is, of course, unlikely we are going to reach the tens of thousands by the end of the parliament.

"Why is that? It's because we have seen increasing numbers of people coming from across Europe, partly because our economy is doing better than other economies in Europe."

The Secretary of State made clear the UK Government had already moved to restrict benefits to migrants and would "continue to look at what we can do".

She also stressed the principle of free movement of labour had to be examined, saying: "It is important as we look ahead to negotiating a new relationship with the EU, that we put free movement as one of those key issues that we are going to negotiate on."

But Yvette Cooper, Mrs May's Labour Shadow, said the Home Secretary had "finally admitted that her net migration target is in tatters yet she still won't take responsibility for it".

In the wake of Ukip's Rochester by-election victory, giving Nigel Farage's party its second MP, Tory colleagues have urged the PM to introduce emergency measures to curb migration.

It has been suggested Mr Cameron's team has been studying proposals from think-tank Open Europe that would stop EU migrants receiving in-work benefits such as tax credits.

About 250,000 are thought to receive the income top-ups, costing the Government around £1.6 billion a year. A report from the think-tank suggests a single Spanish immigrant on the minimum wage can see their weekly income rise from £214 to £290.

But the PM was warned against any such move by Ken Clarke, the Europhile former Chancellor.

He noted: "You have an Englishman working alongside a Pole doing the same job, they both pay the same taxes - which amongst other things pay for tax credits -and the Englishman gets the tax credit and the Pole doesn't.

"If I was a Polish politician, I wouldn't agree to that in a negotiation, nor do I think it is a particular problem, and I don't think it would pacify the Ukip people and the extreme Eurosceptic people."

The Nottinghamshire MP decried the tactics of the two major parties in trying to imitate Ukip "since they have actually made them more credible and gifted them two by-elections".

He added: "We've got to get back to a serious agenda where Ukip have no policies worth talking about, on the economy, on the health service, on education."

Rachel Reeves for Labour, which announced EU migrants claiming out-of-work benefits will have to be in Britain for two years instead of the current three months, said: "We've admitted we made mistakes in the past."