Sarkozy called a government meeting Wednesday after Gypsies clashed with police this month following the shooting death of a youth fleeing officers in the Loire Valley.
Sarkozy said those responsible for the clashes would be "severely punished" and ordered the government to expel all illegal Roma immigrants, almost all of whom have come from eastern Europe.
He pushed for a change in France's immigration law to make such expulsion easier "for reasons of public order." He said illegal Gypsy camps "will be systematically evacuated," calling them sources of trafficking, exploitation of children and prostitution.
The language has chilling undertones in a country where authorities rounded up Gypsies and sent them to concentration camps during the Nazi occupation in World War II. Former President Jacques Chirac, the first French leader to acknowledge the state's role in the Holocaust, condemned "the Nazi madness that wanted to eliminate the Gypsies."
Around Europe, some 250,000 to 1.5 million Roma were killed during World War II. Accurate figures are difficult to find, because so many Roma were rounded up away from public view, executed and dumped into mass graves.
French Roma representatives were not invited to Wednesday's presidential meeting, and said they are the only ethnic group that French authorities can openly target.
Interior Minister Brice Hortefeux insisted that Wednesday's measures "are not meant to stigmatize any community, regardless of who they are, but at to punish illegal behavior."
Romania and Bulgaria are members of the European Union, and their citizens can enter France without a visa, but they must get work permits to work here or residency permits to settle long term.
Community leaders contend the very principle of the meeting - which singled out an ethnic group in a country that is officially blind to ethnic origins - is racist and warn of grave consequences if their side isn't heard. France's government does not count how many of its citizens are of a certain ethnicity; everyone is simply considered French.
"Today ... I am afraid we're preparing to open a blighted page in the history of France, which could sadly lead to acts of reprisal in the days ahead," said lawyer Henri Braun said at a Wednesday news conference by French Roma leaders. "There is a huge problem of racism in France towards this population, there is enormous discrimination."
France's relationship with what it calls Gypsies is complex and complicated by divisions among the disparate populations.
One, formally given the administrative label of "traveling folk," includes several hundred thousand French citizens who have lived in France for centuries, and were traditionally nomadic but have become increasingly sedentary in recent years.
The other main Gypsy population is made up of recent immigrants who come mostly from Eastern European countries like Romania and Bulgaria, usually illegally, and are often seen begging on the streets of French cities.
Those in the more established communities say they are being unfairly lumped together with illegal new immigrants. Sarkozy's orders Wednesday targeted Roma, though the violence in Saint-Aignan earlier this month was in a community of traveling folk established in the region for years.
Alice Januel, whose organization represents Catholics among French Gypsies, warned that "If Mr. Sarkozy thinks that by clamping down he is going to calm the youth, I don't think that he will succeed. We have a youth that is rebellious."
Sarkozy also proposed that France bring in about 20 Romanian and Bulgarian police to work in the Paris region and send French police to Romania and Bulgaria, to help fight trafficking and other crime by Roma.