New asylum seekers are to be given the 'smart' cards
But refugee groups have expressed concerns that the new Applicant Registration Cards (ARC) could infringe asylum seekers' civil rights.
The cards, which are roughly the size of a credit card, will also store some data that can only be accessed by immigration officials.
Until now each asylum seeker arriving in Britain has been given a Home Office letter confirming their right to stay while their case is being considered.
The system has been criticised because the forms, on a single piece of paper, have proved easy to forge.
The new cards are intended to replace the paper forms for all new asylum seekers arriving in the UK from the autumn onwards.
Refugee groups have given a cautious welcome to the changes.
They say the system could speed up the processing of asylum applications.
But there is also concern the cards could be used to track the movements of refugees and store information about them.
'Radical'
The introduction of the new cards was announced by Home Secretary David Blunkett in October as part of a shake-up of the asylum system.
He said he would scrap the controversial voucher and dispersal systems as part of a "fundamental and radical reform" of the asylum and immigration system.
Mr Blunkett acknowledged that the current system was too slow, vulnerable to fraud and unfair both on local people and on asylum seekers.
He said the whole system would be overhauled, with unsuccessful asylum seekers removed from the country swiftly.
"I do not intend to tinker with the existing system but to bring about radical and fundamental reform of our asylum and immigration policy," said Mr Blunkett.
Risk
On Thursday Home Office Minister Lord Rooker said: "The ARC is one of several new proposals outlined by the Home Secretary last October for radical and fundamental reform of asylum and immigration policy.
"By introducing the card, the government is at the forefront of making the most of up-to-date technology to combat fraud and to ensure that asylum seekers are identified rapidly at all stages of their application."
Liberal Democrat home affairs spokesman Simon Hughes welcomed the introduction of the smart card but warned it should be coupled with an entire overhaul of the asylum process.
He said: "The introduction of smart cards must be matched by an asylum system which is both rapid and fair, properly resourced and which enables asylum applications to be dealt with to common and high standards across Europe, without asylum seekers having to risk their lives to get to a specific EU country."