Jeff Sessions has announced local and state governments seeking funding must prove they aren't 'sanctuary cities' in order to receive their federal grants.
'Sanctuary cities' is a term used to describe local branches of government which fail to enforce federal immigration laws and thus help immigrants avoid deportation.
Local and federal governments will henceforth have to demonstrate they don't fall into this category - or Washington will withhold their grant money.
The US attorney general, a close ally of Donald Trump, has said sanctuary cities jeopardise national safety by putting 'dangerous criminals' on the streets.
He urged such municipalities to "comply with federal law."
The power to reduce grants was enshrined in an executive order released days after Donald Trump was inaugurated.