The government was on Friday embroiled in a legal wrangle over its controversial immigration policy after its decision to impose a cap on migrants from non-European Union countries was challenged in court.

The Joint Council for the Welfare of Immigrants (JCWI), a leading campaign group, specifically questioned the legality of the interim cap introduced in June ahead of a permanent annual limit on non-EU immigrants to be imposed next year arguing that the decision did not have proper parliamentary approval.

The Council pointed out that earlier this year the Court of Appeal ruled that the Home Secretary acted unlawfully when changes were made to the points-based system without proper parliamentary approval.

“The coalition government has once again sought to rush through significant changes to the United Kingdom's immigration laws while side-stepping proper parliamentary process,” said the Council's lawyer Shahram Taghavi.

Its chief executive Habib Rahman described the cap as “harsh and disproportionate''.

“JCWI considers that the caps are a further attempt by the government to blame part of the financial difficulties the country finds itself in on migrants,' he said.

Immigration Minister Damian Green said the government would “rigorously'' defend its case in court and was “confident of success'' .

“The government has been clear, we will introduce our permanent annual limit on economic migrants from outside the EU from April 2011. While we decide how the annual limit should operate it is imperative that we have interim measures in place to avoid a rush of applications from migrants before the new rules take effect,” he said.

The Cabinet itself, however, is divided over the issue with Business Secretary and senior Lib Dem figure Vince Cable openly campaigning against it arguing that a rigid cap would hurt the economy and damage Britain's relations with emerging economies such as India and China, main sources of skilled workers.

Leading businesses have warned that they might be forced to relocate jobs abroad as an arbitrary immigration limit could create shortage of skilled workers at home. Many of the UK-based call centres and jobs in IT and finance could be moved to countries where it is easier and cheaper to find suitable staff, according to media reports.

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