Mike Wood, the shadow Cabinet Office minister, said: “While we welcome the scrapping of any mandatory identification, this is yet another humiliating U-turn from the Government. Keir Starmer’s spinelessness is becoming a pattern, not an exception.

“What was sold as a tough measure to tackle illegal working is now set to become yet another costly, ill-thought-out experiment abandoned at the first sign of pressure from Labour’s back benches.”

While the digital ID scheme will go ahead, the compulsory element, which meant everyone would need to provide digital ID to prove they had the right to work in the UK, has been cancelled.

It is just the latest in a long list of U-turns, including on winter fuel payments, disability benefits, workers’ rights and more. The Government is also set to water down plans for more judge-led trials, according to reports.

The Transport Secretary has said digital right-to-work checks will be mandatory, but that a digital ID or “another form of digital documentation” will be accepted.

Heidi Alexander appeared to confirm that digital ID will no longer be mandatory for right-to-work checks, as was set out by Sir Keir when he announced the flagship policy last year.

She told Times Radio: “We will still have digital ID. We will still have mandatory digital right-to-work checks.

“The form of digital ID … the nature of the material that is presented could be either the digital ID on somebody’s phone … or it could be another form of digital documentation which contains proof of your right to work.”

She said the Government was committed to introducing digital IDs.

Asked if they would be compulsory, Ms Alexander said: “We are committed to having mandatory digital right-to-work checks.”

Pressed further, she said: “You say this is some sort of massive U-turn – we said we would have digital checks on people for right to work, that is what we are continuing to do.”

The Government’s decision to backtrack on mandatory digital ID for right-to-work checks is “yet another U-turn” which “shows how shambolic this Government is”, Dame Priti Patel has said.

The Shadow Foreign Secretary also said: “Of course, Keir Starmer’s feeble justification for digital ID was that it would stop the small boats, so clearly he was making it up as he goes along.

“This was a failed project from the outset, and the Government should hold its head in shame, really, that it even proposed such a spurious scheme in the first place.”

Former Labour prime minister Sir Tony Blair’s think tank called removing mandatory digital ID from right-to-work checks “a change in approach, not a change in direction”.

Sir Tony himself tried to introduce mandatory ID cards during his time in Downing Street, but was forced to water down the policy to a voluntary scheme that was then scrapped by the Conservative-Lib Dem coalition.

Ryan Wain, executive director of policy and politics at the Tony Blair Institute for Global Change, said: “Removing mandatory digital ID from right-to-work checks is a change in approach, not a change in direction.

“Digital identity remains essential if we want public services that work in the way people now expect, with less friction, fewer forms and services that actually join up.

“The real test isn’t whether people are forced to use it, but whether it’s good enough that they choose to. People who can pay for more personalised and preventative services already get them. Government should be aiming to make that the standard, not the exception.

“If digital ID makes everyday interactions with the state easier, faster and more personalised, people will choose it. Getting the design and rollout right is how you build public trust, and it’s the foundation for genuinely modernising public services.”