Amber Rudd has hinted she could ditch plans to force companies to publish the number of foreign staff they employ.
The home secretary had said the proposal was to prevent migrants “taking jobs” that “British people can do”.
Labour said it showed Theresa May is presiding over the return of the “Nasty Party” and accused the Conservatives of becoming “increasingly xenophobic”.
Speaking to BBC Radio 4’s Today programme this morning, Rudd said it was “not something we’re definitely going to do”.
“The purpose if this review is to look at whether they are doing enough to train people locally when they could be able to do that. There are record levels of employment, which is great, but there are still one in ten 18 to 24-year-olds unemployed and I want businesses to think first about locally training people where possible,” she said.
“For instance, I went and visited a factory quite recently where they recruit almost exclusively from Romania and Poland, where they have people who have experience in factories building these sofas that they have. They didn’t even consider training locally - there was a local college they could have worked with, but they choose to recruit outside the UK.
Rudd added: “This is one of the things we’re going to look at in the review. The business I mentioned to you would have shown it had 80 to 90% non-UK citizens working there.
“But it’s not something we’re definitely going to do, it’s one of the tools we’re going to use as a review to see if we can use it as a way of nudging people to do better behaviour. We are saying work with us, businesses, to deliver on what we need to have, which is more skilled local labour force.”
Shadow home secretary Andy Burham said: “The tone of the Conservative conference has become increasingly xenophobic. Theresa May has presided over the return of the Nasty Party. Whether it’s doctors, migrants or Europe, the Tories are blaming anyone but themselves for their failure.
“The idea of British companies producing lists of foreign workers runs counter to everything that this country has ever stood for. It would be divisive, discriminatory and risks creating real hostility in workplaces and communities.
“If the Government proceeds with legislation in this area, it will face the mother of all battles.
“This week, it has become increasingly clear what the Prime Minister means by ‘hard Brexit’ and many people will find it disturbing. While we must respond to concerns expressed in the Referendum, people did not vote for this and fighting ‘hard Brexit’ must be the new frontier in progressive British politics.”