Stephen Woolfe, who quit the eurosceptic party last year, is demanding unskilled migrants to be banned from Britain for five years in order to bring yearly net migration down to 50,000.
In a report for campaign group Leave Means Leave, Mr Woolfe argues in favour of a new visa scheme which combines the Australian points-based system and plans for work permits to be rolled out post-Brexit.
Critics have blasted the controversial move, claiming it would have a “serious economic impact on our country” in areas such as the NHS and agriculture.
However, the independent MEP, who is part of the campaign group Leave Means Leave, rejected the calls, insisting unemployed British workers could be trained to make up for any shortages.
Speaking on Sky News he said: “This would slowly filter downwards over a period of two to three years, which you see in terms of the report.
“Secondly, we have 826,000 young people from 16 to 24 who are not working, and we should be putting our money into training them to fill the jobs.”
The report was criticised by Labour MP and spokesperson for Open Britain, Mike Gapes, who warned of “major issues” if such migration controls were implemented.
Mr Gapes told Sky News: “The Australian points-based system actually leads to a higher level of migration.
“The economy that we have grows because it actually has workers, there would be major labour shortages – we’re already 20,000 nurses short in the NHS.
“We’ve obviously got to do more about training people in this country to do highly-skilled jobs.
“But, the agriculture sector, the food processing sector, retail, a lot of hotels would be massively affected by the loss of ability to have people come from other countries.”
Under Mr Woolfe’s recommendation for the British working visa system, there would be no cap on highly skilled workers, entrepreneurs and investors.
However, unskilled workers would be blocked for five years.
Permits would only be granted if applicants have a job offer with a minimum salary of £35,000, passed an English test, signed a five-year private health insurance contract and have sufficient savings.
There would, however, be exemptions for health workers if they were needed from overseas, but the report argues the UK should focus on increasing the number of Britons working in the medical profession.
April 10th, 2017: Express