All states, including California, must now issue driver's licenses and ID cards according to new federal standards under the REAL ID Act.
Applicants must present proof of citizenship or legal status. The source of those documents must be verified. The cards themselves must have security features to prevent counterfeiting and multiple licensing in several states.
The new cards would be needed to board airplanes and enter federal buildings.
"People who overstayed their visas had a form of documentation that made it seem to the innocent observer that they were in this country legally. Under today's rules, we're going to put a stop to that activity," Homeland Security Secretary Michael Chertoff said.
While California DMV has already implemented some of those federal requirements, it has asked for a two-year waiver before it has to comply.
"What we're doing is going through a very thoughtful and deliberative review process of the final registrations to see how they sync up with California's privacy and security standards that we have on the books now," said Mike Marando, DMV.
The American Civil Liberties Union and other privacy advocates are concerned.
"REAL ID creates a national database which, if breeched or intruded, it could provide identity thieves a wealth of information," said Assemblyman Dave Jones (D-Sacramento).
There is a provision in the REAL ID Act allowing states to enact a specially marked driver's license that would only be for illegal immigrants, but it would not let them on a plane or in a federal building.
That gives State Senator Gil Cedillo's proposal a boost.
"We can make sure all motorists in California are licensed, tested and insured and that our nation is more secure," Cedillo said.
But the governor has twice vetoed Sen. Cedillo's proposal, and a third version is pending in the Assembly.
In past veto messages, the Governor said he wants to see both the identification regulations and immigration reform implemented before considering a special license for illegal immigrants.