The poisonous tone of last year's Brexit campaign has led to the demonisation of immigrants, the head of a group of MPs has said.
The group - chaired by anti-Brexit Labour MP Chuka Umunna - warns in a report that anti-immigrant rhetoric is making it harder for new arrivals.
It calls for government action to encourage "meaningful social mixing".
Leave Means Leave said there was nothing poisonous about wanting to take back control of Britain's borders.
In its report, the cross-party group on social integration, says migrants should be treated as Britons-in-waiting who can eventually gain citizenship instead of being viewed as security threats.
Mr Umunna said: "The demonisation of immigrants, exacerbated by the poisonous tone of the debate during the EU referendum campaign and after, shames us all and is a huge obstacle to creating a socially integrated nation.
"We must act now to safeguard our diverse communities from the pedlars of hatred and division while addressing valid concerns about the impact of immigration on public services, some of which can contribute to local tensions."
The group calls for local authorities to be given a legal duty to promote integration and for new arrivals to be put on the path to citizenship straight away.
It also proposes that businesses employing large numbers of immigrants should pay a levy that could be used to help ease the strains of migration on communities.
And the group repeats a call it made last year to allow different parts of the UK to set their own immigration policy, an idea rejected by the Home Office.
Critics have accused the group of trying to keep EU freedom of movement through the back door.
Richard Tice, co-chairman of pro-Brexit campaign Leave Means Leave, said: "This is typical of Chuka Umunna - a member of the metropolitan liberal elite who is completely oblivious to the concerns of millions of hard-working British families across the country.
"There is nothing 'poisonous' about wanting to take back control over Britain's borders, in fact he should be ashamed to suggest there is."
He claimed Mr Umunna was "in complete denial about the referendum result and is trying to retain a form of freedom of movement which is completely against the democratic will of the British people".
The cross-party group visited areas of high immigration in Yorkshire, Lincolnshire and Dagenham and found migrants are increasingly leading separate lives to the rest of the community.
Under a regional system, local leaders would be able to assess the impact of immigration on public services and community cohesion and create a certain number of visas to meet local economic needs, according to the report.
The majority of MPs and peers in the group are Labour members, but it also includes Conservative, Lib Dem and SNP MPs.
It has previously called for compulsory English lessons for people moving to the UK who cannot speak the language.