Shabana Mahmood is expected to set out a series of conditions for those seeking indefinite leave to remain status during her Labour Party conference speech on Monday.
Asylum seekers will need to be working, paying national insurance and not be claiming benefits, under the proposed changes.
Labour said there is a “dividing line” between the Government’s proposals and Reform UK’s pledge to scrap settled status for all non-EU migrants.
A consultation on the changes will be launched later this year.
The Prime Minister suggested Reform’s latest migration policy is prejudiced, telling the BBC on Sunday that the plan to remove indefinite leave to remain for non-EU migrants already living in Britain was “racist”.
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Nigel Farage hit back, suggesting Sir Keir Starmer “has insulted millions of people” who support Reform.
Chancellor Rachel Reeves defended the PM’s comments on Monday, saying she agreed with Sir Keir’s assessment of Reform’s plan.
“I think it is a racist policy,” she said. “People support the Reform party for all sorts of reasons, but this policy is a racist policy.”
In its White Paper published in May, the Government also pledged to increase the amount of time migrants have to wait before they can apply for indefinite leave to remain in the UK to 10 years.
Currently, most migrants who come to Britain on time-limited work visas can make an application for indefinite leave to remain after five years.
In her speech, Ms Mahmood is expected to express her fears that “patriotism, a force for good, is turning into something smaller, something more like ethno-nationalism”.
The new Home Secretary will argue her toughness on secure borders, fair migration and safe streets are essential components of an “open, generous, tolerant” country.
She will also warn party members that “you won’t always like what I do”.
Ms Mahmood will speak about her parents’ experience of arriving in the UK, arguing the acceptance of migrants depends on their contribution to communities.
Additionally, she is expected to refer to her personal experience of shoplifting while working behind the till of her family’s corner shop as a child as she launches a “winter of action” scheme in a bid to tackle the crime.
Shadow home secretary Chris Philp said Labour was “playing catch-up” with Conservative proposals to toughen indefinite leave to remain rules.
But he said the plans were a “watered-down copy” of his party’s plans, which went further by pledging to also end automatic citizenship routes, put an annual cap on legal migration and not renew visas for the unemployed or those in low-paid jobs.
“This is the same Labour Government that scrapped the Rwanda deterrent and then lost control of our borders. Only the Conservatives have a detailed and deliverable plan in our Deportation Bill. That is how you restore control, not more gimmicks.”
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