Shabana Mahmood has softened plans to force low-paid workers to wait 15 years before settlement in the UK following a backlash from fellow cabinet ministers and backbench Labour MPs.

Under pressure from health unions, the home secretary has moved to allow an estimated 280,000 care workers and their dependants to apply for indefinite leave to remain after five years.

Most of the hardline plans drawn up by Mahmood’s office last year remain, including plans to force those who arrived in the UK by irregular means, such as small boats, to face up to 30 years before being able to apply for settlement.

On Monday, Mahmood said: “Settled status is one of the most valuable rights this country can offer. Until now it has been given almost automatically.

“From today it must be earned. Those who contribute will settle fastest. Those who don’t play by the rules will be refused or wait much longer.

“This policy creates a migration system that is fair: fair to those who come here and play their part and fair to British citizens already here, who must not be asked to bear a greater burden.”

Home Office officials calculate that about 500,000 migrants will have to wait longer than the current five years, but some 1.4 million out of the 1.9 million who came to Britain under the so-called “Boriswave” surge in legal migrants will still be eligible for indefinite leave after five years.

In a revised set of proposals, the home secretary said care workers earning more than £25,000 will be able to apply for indefinite leave to remain after five years, a third of the time that was announced last year.

The five-year pathway will apply to “an estimated 146,000 care workers and 136,000 dependants”, the document said.

Another estimated 100,000 care workers and their dependants will be given an opportunity to apply for a new five-year visa, following concerns over exploitative practices in the sector, the Home Office said.

Under the initial proposals drawn up last year, workers in occupations below degree level (RQF Level 6) were categorised for an extended 15-year wait before they would become eligible for permanent settlement.

A Home Office response to the consultation, published on Monday, said: “Workers in occupations below the RQF6 will no longer face the 15-year pathway proposed in the consultation. They will instead qualify through the 10-year pathway where they meet strengthened minimum requirements, with opportunities to qualify sooner where they demonstrate the contribution required for an accelerated pathway.”

About 100,000 skilled workers including butchers and chefs would have to wait 10 years before being able to apply, officials said.

Highest earners – those earning more than £125,000 – will be able to settle within three years. Those earning more than £50,271 and some public service workers such as doctors, nurses and teachers will be able to settle after five years.

The new rules will place particularly stringent requirements for settlement on refugees – with those entering via small boat and reliant on public funds set to wait a minimum of 30 years for permanent settlement.

The exception will be the small number of refugees who enter through designated safe and legal routes such as the reopening of the scheme for Afghan women and girls and Palestinians. No other refugees will be eligible for settlement if they have accessed any public funds.

If a refugee claims asylum having entered the UK legally, they will wait up to 20 years for settlement though that may be reduced to 10 years if they move into sustained work or study and demonstrate they are earning enough to make a sustained contribution.

For those who enter illegally, there will be a 10-year penalty to gain settlement rights – for those working or studying, it will mean a 20-year wait, for those not working or studying, the minimum will be 30 years. Most refugees will be told they must meet language requirements and owe no debts.

Following pushback from trade unions, care providers, and senior Labour figures including the housing secretary, Angela Rayner, and London mayor, Sadiq Khan, Mahmood has spared workers from the maximum 15-year requirement.

Under the plans published for consultation, the standard qualifying period for settlement was supposed to double from five to 10 years, while some workers in occupations below graduate level, including care workers, would have faced a 15-year qualifying period, subject to proposed exemptions and reductions.

Mahmood’s earlier plans would have meant that 117,000 low-paid care workers and their 79,000 dependants would have to wait up to 15 years to receive indefinite leave to remain.

In June, Rayner described making care workers already in Britain wait up to 15 years for permanent residence as “un-British”. In September, the energy secretary, Miatta Fahnbulleh, said the plans would have been “tough” for her family, who came to Britain as refugees.

Pressure to tighten up the rules has intensified as the so-called “Boris wave” of migrants who came during Boris Johnson’s administration begin to reach the current five-year threshold to qualify for indefinite leave to remain. Analysis published on Monday found skilled migrants settling in the UK were expected to contribute billions more to the public finances than they cost over their lifetimes.

The Institute for Public Policy Research (IPPR) said skilled migrants and their adult dependants due to settle in the UK under current rules were expected to make a net lifetime contribution of about £115bn through the taxes they pay.

Mahmood met union general secretaries on Monday – some of whom had raised alarm at the changes – to map out the final details.

The Guardian first reported in July that the prime minister, Andy Burnham, was considering exempting hundreds of thousands of care workers from the changes to relieve pressure on the social care sector. The Home Office has granted about 200,000 health and care worker visas in the last five years, with many more people coming as their dependants.

Launching the consultation on earned settlement last year, Mahmood described Britain as a “multi-faith, multi-ethnic democracy” that demanded “contribution and integration”. She added: “To become a part of this country, permanently, is therefore not a right but a privilege – and one that must be earned.”