The UN and other organisations have condemned the legislation
Denmark's parliament has voted in favour of seizing the assets of asylum seekers to help pay for their stay.
The controversial law is part of a package of immigration reforms designed to make Denmark less appealing for migrants.
The new measures, which also delay family reunions by increasing the waiting period from one to up to three years, had cross-party support and passed with an overwhelming majority.
The UN and other human rights organisations have condemned the legislation, saying it breaks international laws on refugees.
Critics say separating families is inhumane and will severally affect integration efforts.
However, the Danish government says the measures have been "terribly misunderstood".
Government spokesman Marcus Knuth said: "This misconception that Danish authorities would take personal valuables and so on is so, so wrong".
"We're simply asking that if asylum seekers - in the rare case where they do come with enough means to pay for themselves then - following exactly the same rules as for Danish citizens wishing to be on unemployment benefits - if you can pay for yourself, well then you should pay for yourself, before the Danish welfare system does it".
Reporter Ian Woods says over 70% of Danes think the migrant issue is the most important issue facing the country.
He says the adoption of the new measures, which were backed by the main-centre left opposition, reflect are marked shift to the right in Danish politics.
Denmark received 21,300 asylum-seekers - one of the highest rates per capita in the EU - last year.
It has introduced tougher border controls until at least early next month.
By comparison, neighbouring Sweden took 160,000 migrants last year, while Germany took over one million.