Digital ID will become mandatory as a means of proving the right to work under the plans, but people will not be required to carry or asked to produce it.
It will be available to UK citizens and legal residents by the end of this Parliament.
The Prime Minister said: “I know working people are worried about the level of illegal migration into this country. A secure border and controlled migration are reasonable demands, and this government is listening and delivering.
“Digital ID is an enormous opportunity for the UK. It will make it tougher to work illegally in this country, making our borders more secure.
“And it will also offer ordinary citizens countless benefits, like being able to prove your identity to access key services swiftly – rather than hunting around for an old utility bill.”
The plans envisage ID cards being stored on devices in the same way contactless payment cards or the NHS App are.