President Bush last night tried to balance differences in his Republican Party over illegal immigration by rejecting an amnesty and calling for a hardened Mexico border.
However, he also vowed the United States would remain "a welcoming society".
Fuelled by fears of terrorists slipping into the country, escalating violence and drug smuggling, Americans have become increasingly worried about illegal immigration. More than three-quarters think the government is not doing enough to control the borders, according to a CBS News poll last month.
At the centre of Mr Bush's reforms of the immigration system is the guest worker proposal, which offers the estimated 11 million illegal immigrants in the United States the chance to register and work - mostly at low-skilled jobs Americans don't want - for up to six years. They must then return to their home countries for a year to apply for a new work permit.
The measures will have implications for the estimated 25,000 Irish people working and living illegally in the US.
Mr Bush said it would create incentives for legal immigration, serve national security interests by identifying who was in the country and provide a boost to the economy.
But Republican critics prefer to crack down on illegal immigration with strengthened border patrols, the military and fences.
The US House of Representatives plans to take up the immigration issue soon but has scheduled action only on border security, leaving the temporary worker programme for a later date. The Senate will consider more comprehensive reform in February.
Each year, more than one million undocumented migrants try to slip across the rivers and deserts on the US-Mexico border in search of work. Almost half come through Arizona and hundreds die attempting the dangerous trip.
The problem reached such epic proportions in the summer that Arizona and New Mexico declared states of emergency, saying tens of thousands of illegals were endangering border security. That allowed the governors to use millions of federal dollars to shore up their borders.
Angry residents have formed armed teams called Minutemen to watch over the border and a movement has sprung up among conservatives to wall off its entire length with a high-tech fence. More than two dozen members of the US Congress have signed on to the idea.