Ukip's "hostility and extremism" needs to be challenged, Yvette Cooper said as she claimed it remains too easy for "dodgy employers" to exploit immigration.
The shadow home secretary warned Nigel Farage's eurosceptics will continue "playing on people's fears" if the Government fails to deal with the impact of immigration.
She called for reforms to stop agencies and employers using cheap overseas labour to halt UK wages and jobs being undercut.
Ms Cooper made the remarks as the battle for votes ahead of Thursday's European and council elections intensifies, with opinion polls suggesting the UK Independence Party will enjoy strong support at the ballot box.
She said: "The Government needs to address the impact of immigration or Ukip will be able to keep playing on people's fears.
"We need practical solutions to the concerns people have about their jobs and wages. And we need to challenge Ukip's nasty and divisive approach because they don't have the answers Britain needs"
Ms Cooper went on: "I t's time to reform the rules in Europe and in Britain. Right now the system isn't fair, and it is too easy for dodgy employers or agencies to exploit immigration to undercut local wages and jobs.
"We need reform in Britain and in Europe. Exploiting migrant labour to undercut local wages and jobs should be stopped. So Labour would halt abuse of zero hours contracts, outlaw agencies recruiting only overseas, and make serious exploitation a crime."
She added: " We need practical answers instead of parties like Ukip preying on people's fears, or pushing divisive, unpleasant views about who they will and won't live next door to. We will keep challenging Ukip hostility and extremism."