In a statement, Kirstjen M. Nielsen, the secretary of Department of Homeland Security, said many never showed up to their court dates, creating a "catch and release" problem.
Earlier that month, he invoked national security powers to deny asylum to migrants who enter the country between ports of entry, but the move was quickly blocked by the courts.
Unlawful crossings at the southern border have dropped dramatically since the late 1970s, but in recent years applications for asylum have ballooned and more Central American families and unaccompanied children are migrating to the US.
US officials said the Mexican government will allow asylum seekers access to USA immigration lawyers, but it was unclear where attorneys and their clients would meet.
Nielsen referred to the situation in a statement as an illegal immigration crisis.
The immigrants will still "be interviewed by a US asylum officer, but they will no longer be released into the interior with a notice to appear in immigration court", NPR's John Burnett reports.
It is not illegal to cross the border without a visa to apply for asylum.
Administration officials say many are gaming the system and making false claims as a way to stay in the U.S. While most pass their initial screening, only about 9 percent are eventually granted asylum. The result was that an influx of migrants from Central American countries have been allowed inside the US while their asylum cases wind through the immigration courts. WIthout an immigration attorney, only one in ten asylum seekers are successful, according to TRAC.
Some parts of northern Mexico, particularly across from Texas, are considered very unsafe due to violence and drug trafficking. Mexican officials reportedly found out about this new policy Thursday morning in a letter from the U.S. Department of Homeland Security.
"Giving them food or work authorization does not protect them from the cartels or the war zone that they would be sent to", Harbury said. It's likely that human rights groups will sue to block the policy, which Amnesty International executive director Margaret Huang called a "stark violation of international law" and a "callous response to the families and individuals running for their lives".
The United States has been in negotiations with Mexico for weeks to reach such an accord, which had been referred to as "Remain in Mexico", believing that illegal crossings will decline if Central Americans believe the asylum system will no longer offer them a way to avoid deportation.
And in the past two months alone, more than 100,000 people have been apprehended for illegally crossing into the United States.
Discussions on the arrangement have been going on between the two countries for months, well before the new leadership took over in Mexico on December 1.
Previously, immigrants were released into the United States, under what was known as "catch and release".
Experts in Mexico doubted whether Lopez Obrador would face any significant backlash.
Thousands of people from Central America have headed to the Mexico-U.S. border.
This has caused huge backlogs and confusion at the border on the Mexican side.