Nicola Sturgeon was joined by the Confederation of British Industry (CBI) Scotland in condemning the plan which could see net migration from the EU fall by four-fifths, and it was questioned by some Scottish Tories.
Under the system that will apply from 2021, once EU free movement comes to an end, anyone who wants to move to the UK to live and work would need some form of permission, and EU visitors will need to take part in an Electronic Travel Authorisation scheme to visit.
However, a cap on the number of skilled workers allowed into the UK will be lifted, and there will be no limit on the number of international students who could come to study in the UK.
Moments before the new policy was formally unveiled by Sajid Javid, Theresa May appeared to overrule her Home Secretary by telling MPs the government would persist with a net migration target of 100,000 - a level that has never been reached since it was introduced eight years ago.
Responding to the immigration white paper, the Scottish First Minister said: "The UK Government's immigration blueprint is an act of vandalism on Scotland's economy, communities, NHS and public services.
"The UK Government's proposals take absolutely no account of Scotland's distinct needs. The White Paper itself suggests that it may result in an 85% reduction in the number of EEA workers to Scotland - this will be catastrophic for communities and businesses across the whole of Scotland, particularly for key sectors such as tourism, hospitality and the care sector.
"Our modelling estimates that real GDP in Scotland will be around 6.2% lower by 2040 than it would have been otherwise, as a result of Brexit-driven reduction in migration.
“This is equivalent to a fall of almost £6.8 billion a year in GDP by 2040 and a fall of £2 billion in Government revenue over the period. This is an unacceptable price for Scotland to pay.”
Tracy Black, the director of CBI Scotland, called the policy a “sucker punch” to employers.
“A new immigration system must command public confidence and support the economies of all parts of the UK,” Ms Black said. “These proposals would achieve neither.
“The proposals outlined in the White Paper don’t meet Scotland’s needs or the needs of the UK as a whole, and would be a sucker punch for many firms right across the country.
“The UK Government’s own analysis suggests people and regions will be poorer as a result of them.”
The proposals also drew criticism from Kirstene Hair, the Scottish Conservative MP for Angus. “The detailed White Paper outlines a skilled based system that will enable nationalities around the world to come and work in the UK," Ms Hair said.
"But I do have concerns regarding the £30,000 salary threshold and low skilled sectors.
“Many healthcare, hospitality, agricultural and fisheries jobs do not meet the salary floor or skill level in the proposals outlined which could prevent these vital workers coming to the UK to work and contribute to our economy."
Scottish Secretary David Mundell defended the new measures, saying they provide "a strong foundation for delivering what businesses and individuals in Scotland want – a UK-wide immigration system with the flexibility to meet the needs of all sectors of the economy in all parts of the country."
Mr Mundell added: "Our 12 month engagement with business will allow us to develop a future immigration system which addresses the specific economic and demographic needs in Scotland.
"At the same time, the Scottish Government must do more to shoulder their share of the responsibility for making Scotland an attractive place for people to live, work and put down roots.”
A new work visa scheme will allow immigrants to come to the UK to work for up to a year.
The new measure, which would be in place until at least 2025, is designed to act as a "safety valve" for the economy and protect sectors reliant on lower skilled overseas labour.
It would be open to nationals from specified countries, regardless of their skill level or whether they have a definite job offer.
Applicants would need to apply for a visa which would be limited to 12 months, at which point a "cooling-off" period will take effect, meaning they could not return under the same route for the next year.
While in the UK, they would not be entitled to access public funds or switch to other routes, bring dependant family members or seek permanent settlement.
The White Paper states: "We have listened to the concerns of businesses ... and so there will be a route allowing temporary short-term workers to come for a year."
It would be subject to "tightly defined" conditions and only open to migrants from "specified low-risk countries".
Numbers admitted through the route may also be restricted, while the Government stressed it was a "transitory" measure and would be subject to a full review by 2025.
The new skilled work route would be opened up to workers with "intermediate" level skills. Among the occupations that would become eligible are driving instructors, plumbers and restaurant managers.