Kemi Badenoch has vowed to remove foreign nationals from council houses in order to stop Britain being a "cash machine for the world".
The Conservative plan would take nearly 230,000 non-EU foreign national households out of council homes to open them up for British families.
Migrants from any country - including EU member states - would also be barred from taking on new social housing tenancies.
Helen Whately, the Shadow Work and Pensions Secretary, said as she announced the policy last night: "Making Britain your home should be earned by working, paying tax and integrating.
"It should not come with a free ride on the benefits system. Britain cannot be a cash machine for the world."
She added: "Labour has lost control of immigration and lost control of the welfare bill, and it is British families picking up the bill and sitting on waiting lists.
"The next Conservative Government will make foreign nationals ineligible for social housing. Nearly 230,000 homes could go to British families."
Andy Burnham has promised to take council housing into state ownership in a bid to launch the "biggest council house building programme since the post-war period".
But the Tories argue that barring foreign nationals from state-funded homes would reduce waiting lists faster than building new properties.
Under their policy, UK nationals and those holding EU settled status would remain eligible for social housing.
New arrivals from EU countries would not qualify.
Any non-UK or non-EU citizen, whether single or with children, would lose their entitlement entirely.
Tenants who no longer qualify would be given six months to vacate their homes and find private accommodation.
Councils and housing associations currently supply more than four million rental properties in England alone.
These are typically cheaper and offer greater security than private rentals.
The vast majority of council house lettings are given to single people.
In 2024-25, most of the lead tenants in new social lettings were British nationals - 89 per cent or 233,000 people. This does not include the rest of the household.
Over the same period, 2.3 per cent of new lettings were given to "refugees", nearly 4,000 of which were non-UK nationals.
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The most common nationality of "refugees" in a new council house was Afghan.
While asylum seekers are not eligible for council houses while their claims are processed, they are still housed in tax-funded acommodation including HMOs, barracks and hotels.
In Thetford, Norfolk, demonstrators targeted homes thought to be housing illegal migrants on Wednesday evening.
Protests also took place outside housing associations in Glasgow last month amid concerns that migrants were jumping the queue for social housing.
The Conservative proposal closely mirrors a similar policy put forward by Reform UK in June which called for the removal of all foreign nationals from social housing.
Reform's version would apply retrospectively regardless of residency length. The party also plans to scrap Indefinite Leave to Remain status.
Reform would give affected tenants just three months to leave, half the time offered by the Tories, with refusal risking deportation and loss of the right to remain.
Zia Yusuf, Reform's home affairs spokesman, accused the Conservatives of trying to copy his party's policy - while still letting EU citizens stay.
"Kemi's 'changed' Tory Party believes if you're Bulgarian, broke, and came here in 2020, you should get a council house," he said.
"Under Reform, all social housing - old and new - will be for Brits. Tory 'change' is just a lick of toxic paint. Disgrace."
A Labour spokesman said the Tories' plan was an "unserious, unworkable proposal, copied from Reform".
"People without Indefinite Leave to Remain are already ineligible for social housing, so this policy would primarily affect refugees and long-term UK residents who have contributed to this country but are not British citizens, including NHS staff," he said.
"It would also leave more families at risk of homelessness, while driving up the use of temporary accommodation at the taxpayers' expense.
"No amount of headline-chasing, or following Reform to the extremes, can hide the damage the Tories did to our housing system."
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