Shabana Mahmood said she is considering "a big increase" in payments for migrants to return voluntarily to their home countries.
Under current rules, the UK offers payments of up to £3,000 for some people with no right to remain in the country to return home.
The Home Secretary has directed officials to "pilot a small programme" of increased payments, "just to see how it changes behaviour".
The Birmingham Ladywood MP has insisted the policy represents "value for money" but admitted it "sticks in the craw" for Britain's hard-pressed taxpayers.
In plans to overhaul the asylum system set out on Monday, Ms Mahmood said the offer of financial packages to assist with voluntary returns would continue.
But she has now said the figures involved could increase.
She told the BBC’s Political Thinking podcast: "I haven’t alighted on the full sums involved yet, but I am willing to consider a big increase on what we currently pay.
"I know it sticks in the craw of many people and they don’t like it, but it is value for money, it does work, and a voluntary return is often the very best way to get people to return to their home country as quickly as possible."
Labour backbenchers have strongly criticised Ms Mahmood’s wide-ranging reforms, which are aimed at deterring migrants from seeking asylum in the UK and making it easier to remove people with no right to be in the country.
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Andy Burnham 'appreciates support' of Labour MP who offered to sacrifice his seat so Manchester Mayor could challenge PM for leadership
Andy Burnham has said he 'appreciates the support' of Labour MP Clive Lewis
|PA
Andy Burnham has said he "appreciates the support" of Labour MP Clive Lewis, who said he would be willing to give up his parliamentary seat to allow the Manchester mayor to mount a leadership challenge against Sir Keir Starmer.
When asked about the proposal on BBC Radio 4’s Today programme, Mr Burnham said: "I appreciate the support, but I couldn’t have brought forward a plan of the kind that I brought forward today without being fully focused on my role of mayor of Greater Manchester.
"And I’m providing leadership on growth, which is what I think the country needs and is helpful to the Government right now, and we’re doing this in advance of the Budget."
"I would just finish by saying this, what I think part of the country’s problem is the political culture of Westminster which is playing out in front of us right now," he added.
WATCH: Conservative Chair backs Shabana Mahmood's migrant plans - but warns 'problem will never be solved' until UK leaves ECHR
Most Britons think Labour is handling economy 'badly' according to damning new poll
The majority of people said the Government was managing the economy badly
|YOU GOV/PA
A new poll has shown the majority of Britons believe the Government is managing the economy badly in the latest blow to Rachel Reeves ahead of the Budget.
The You Gov survey showed 77 per cent of people think Labour is handling the economy either "very" or "fairly" badly.
Meanwhile, 14 per cent of Britons think it is being managed either "very" or "fairly" well.
The poll comes at the heels of the Chancellor's highly-anticipated Budget on November 26.
Covid-19 inquiry to publish findings on political decision-making during pandemic
The Covid inquiry will publish its findings today on decisions made by Boris Johnson during the pandemic
|PA
The UK Covid-19 Inquiry will publish its findings today into decisions made by former prime minister Boris Johnson and his senior advisers.
Key players, including Mr Johnson and former health secretary Matt Hancock, gave evidence to the inquiry into what they were thinking in 2020, including before the first lockdown was announced in March.
During a series of hearings, they were questioned over Government measures introduced during the pandemic, such as Covid testing, social distancing and the Eat Out to Help Out scheme designed to support businesses.
Chairwoman Baroness Heather Hallett, a former Court of Appeal judge, heard wide-ranging criticisms of Mr Johnson and his team, with WhatsApp messages and emails detailing disagreements disclosed to the inquiry.
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