Many job vacancies are difficult to fill, Lord Mandelson said
Workers from new EU countries have had no "discernable impact" on British jobs, Lord Mandelson has said.
They were helping to fill jobs Britons were unwilling or unable to take, the business secretary told MPs.
There was "no statistically significant impact" on wages and there were still about 500,000 unfilled jobs.
It follows a row over "British jobs for British workers", Gordon Brown's phrase from 2007, since quoted by workers striking in a row over foreign workers.
Lord Mandelson told MPs on the European scrutiny committee that any move towards protectionism would lead to a "race to the bottom as people tried to hang onto what they had and exclude others".
He said: "I think it's important to note at the outset that the nationals coming here from the original eight new accession countries are helping to fill gaps in our labour market our British nationals are either not available to fill or are unwilling to fill."
There had been more jobs created in hospitality, retail and other sectors which employers "have been unable in many cases to find British nationals to fill".
He cited a figure saying more than 600,000 UK nationals had jobs now than in 2001, adding the countries which joined the EU in 2004 did "not seem to have had any discernable impact on higher activity rate in the labour market amongst British nationals".
He added: "Over nine out of every 10 people in employment are UK nationals. One can only conclude there has not been an adverse effect on the employment of British nationals."
He said he did not have specific evidence of the impact of workers from Bulgaria and Romania - which joined the EU in 2007 - but said "very small numbers" had come to the UK and any impact would be "very slight indeed".
But he was challenged by Conservative MP James Clappison, who accused him of using "misleading statistics" from 2001 - three years before the eight countries joined the EU.
He said since 2004, the number of employed UK nationals had dropped by 200,000, while the number of migrants in work had grown "very substantially".
Lord Mandelson said 200,000 was not a "very substantial figure" in the context of the whole UK workforce and did not "contradict" the fact that nine out of 10 people in jobs were UK nationals.
Mr Clappison said suggestions that immigration had been "carefully planned" to fill labour shortages were contradicted by the fact that "significantly more" EU migrants had arrived than the 13,000 a year the government had predicted. He said government policy on EU migration had been "rather chaotic".
And shadow immigration minister, Damian Green, said: "At a time of high and rising unemployment it is incredibly arrogant of Lord Mandelson to assume that British workers are not willing to do these jobs. Most of the unemployed are desperate to get back to work."
In January the prime minister's 2007 Labour conference pledge "British jobs for British workers" was used by protesters at refineries across the UK who were angry that Italian workers had been employed at a Lincolnshire refinery, instead of local staff.
Lord Mandelson told MPs the Italian contractor at the centre of the strike had been brought in because another sub-contractor had been unable to finish the job on time.
He said it was "not true" British nationals had not been allowed to apply for work on that part of the contract but the Italian firm had drawn on its "fixed workforce in order to get the work done".
MPs were told the European Union was the Britain's biggest exports market while trade with the EU supported more than three million British jobs.
The latest figures suggested 47,000 British workers had been posted or seconded elsewhere in Europe - the fifth highest figure in the EU - while about 37,000 EU nationals were posted to the UK.