The centre-right Moderate party presented the controversial proposal at a press conference on Friday morning. A similar bid was flouted by the Christian Democrats in December last year, and also enjoys the support of Sweden's Liberal Party.
Most asylum seekers who arrive in Sweden would be entitled to temporary residency under the proposed plan.
The bid proposed replacing the current practice of offering permanent stays to refugees. However, the Moderates argued that permits could become permanent if the person landed paid employment, or after three years if a variety of conditions were met.
"The purpose is to improve the routes to getting established in society. If you have the right to asylum you will be given temporary residency and if you are offered work it could become permanent," Moderate party leader Anna Kinberg Batra told reporters on Friday.
The move strongly contrasts with the approach of her predecessor and former prime minister of Sweden, Fredrik Reinfeldt, who consistently defended permanent residency permits.
"If you're new in the country you should be set on staying," Reinfeldt told newspaper Dagens Nyheter in an interview at the end of 2014.
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Sweden's asylum policies are a hot topic in the Nordic country, which accepts more refugees per capita than any other of its European neighbours. Anti-immigration party the Sweden Democrats became the third-biggest party in September's general election, scoring a record 12.9 percent of the vote.
The current centre-left government is in favour of keeping permanent permits.
Several commentators hit out at the Moderate's proposal on social media on Friday. The Swedish branch of children's rights organization Save the Children ('Rädda Barnen') wrote on Twitter: "Temporary residency permits? We have long been critical [of this]. A lot can happen in a child's life over the course of three years."
Tillfälliga uppehållstillstånd? Vi har länge varit kritiska. Det hinner hända mycket i ett barns liv under tre år. http://t.co/UqoZEblXDy
— Rädda Barnen (@raddabarnen) May 8, 2015
And a member of Sweden's Green Party, which is part of the ruling centre-left coalition with the Social Democrats, wrote: "Changing to temporary residency permits makes integration more difficult. It only leads to insecurity about whether or not you can start life here for real."
Att ändra till tillfälliga uppehållstillstånd försvårar integrationen. Det leder bara till osäkerhet om man kan påbörja livet på här riktigt
— Maria Ferm (@MariaFerm) May 8, 2015
The Moderates, who are part of Sweden's right-wing Alliance alongside the Centre Party, the Liberals and the Christian Democrats, faced criticism from its own camp as well. The party's youth wing, 'Moderata ungdomsförbundet' (MUF), said it would fight the proposal.
"We should not meet people who are fleeing with the threat of going home. We should welcome them with jobs and integration. Europe gets better from greater openness and Sweden should not meet that by tightening the strap," MUF chairman Rasmus Törnblom told SVT.
But another member of the youth organization said she was in favour of the notion, tweeting: "Temporary residency permits are a responsible proposal. Sticking my neck out and congratulating M & my friends in MUF who support this."
Tillfälliga uppehållstillstånd är ett ansvarsfullt förslag. Sticker ut hakan och hyllar M & mina kamrater i MUF som stödjer detta.
— Linnéa Ekman (@Leahotshot) May 8, 2015
Sweden became the first European country in 2013 to grant automatic residency to Syrian refugees and has since seen asylum requests rise to record levels, which are still expected to reach about 90,000 in 2015.
To cope with an increasing flow of refugees, the Swedish Migration Board announced in March that it was more than tripling the maximum number of residents allowed at asylum centres from 200 to 650.