"I am here today to announce that the programme known as DACA (Deferred Action for Children Arrival) that was effectuated under the Obama Administration is being rescinded," US Attorney General Jeff Sessions said.
The announcement, which was anticipated for the past few days, was greeted with protests from across the country.
Hundreds of protesters gathered outside the White House demonstrating against Trump.
"The Department of Justice has advised the President and the Department of Homeland Security that DHS should begin an orderly, lawful wind down, including the cancellation of the memo that authorised this programme," Sessions told reporters.
Defending the move, he said that to have a lawful system of immigration that serves the national interest, one cannot admit everyone who would like to come here.
"That is an open border policy and the American people have rightly rejected it. Therefore, the nation must set and enforce a limit on how many immigrants we admit each year and that means all cannot be accepted," he said.
"This does not mean they are bad people or that our nation disrespects or demeans them in any way. It means we are properly enforcing our laws as Congress has passed them."
Sessions said that collective wisdom is that the policy is vulnerable to the same legal and constitutional challenges that the courts recognised with respect to the DAPA programme, which was enjoined on a nationwide basis in a decision affirmed by the Fifth Circuit.
He said ending the previous administration's "disrespect for the legislative process" is an important first step.
All immigration policies should serve the interests of the people of the US-lawful immigrant and native born alike, he asserted.
India ranks 11th among countries of origin for DACA students, according to the US Citizenship and Immigration Services statistics available till March 31, 2017.
"Congress should carefully and thoughtfully pursue the types of reforms that are right for the American people. Our nation is comprised of good and decent people who want their government's leaders to fulfill their promises and advance an immigration policy that serves the national interest," the attorney general said.
House Speaker Paul Ryan said now that DACA has been rescinded, there is more to do, and the president has called on Congress to act.
But the Democratic National Committee chair Tom Perez said that by rescinding DACA Trump has secured his legacy as "a champion for cruelty".
First, he took away protections for immigrant parents. Now he's going after their children, he alleged.
"Rescinding DACA is the latest tactic in the Republican playbook to promote hate and discrimination. Because of the Republican Party, DREAMers will lose their ability to go to work and contribute to their communities," Perez said.
He said deportations will tear families apart and drive immigrants back into the shadows, and the economy will face a devastating blow, costing US billions in GDP over a decade.
Los Angels Mayor Eric Garcetti said the decision is a "giant setback" for America.
"President Trump's action on DACA is cruel - it threatens to tear families apart, puts our economy at risk, and will do nothing to unify America or make us more secure," he said.
In a statement, he urged Congress to act as quickly as possible to pass legislation to protect the beneficiaries of DACA.
"Today is a cruel day for Dreamers, our families, and all Americans. President Trump's decision to end DACA is a manufactured crisis in response to an artificial deadline from anti-immigrant leaders," said Lorella Praeli, director of immigration policy and campaigns at the American Civil Liberties Union.
"President Trump just threw the lives and futures of 800,000 Dreamers and their families, including my own, into fearful disarray, and injected chaos and uncertainty into thousands of workplaces and communities across America. He is using the lives of 800,000 people as pawn," Praeli said.
Senator Kirsten Gillibrand said Trump's action is an affront to who "we are" as Americans. Trump is needlessly targeting children who know no other country as home than America, she said.
"This does not make our communities safer or our economy stronger. In fact, it does just the opposite. Congress must lead where the President won't and pass the DREAM Act. America does not merely tolerate immigration - we thrive on it, and we are better than needlessly targeting hardworking young adults to score crass partisan points," she added.