US President Donald Trump took a hard line on immigration while campaigning for office last year and said he planned to "immediately terminate" Daca if elected.
In a statement after Daca was rescinded, he said, "I do not favour punishing children, most of whom are now adults, for the actions of their parents. But we must also recognise that we are nation of opportunity because we are a nation of laws,"
House Democratic leader Nancy Pelosi slammed Tuesday's decision, describing it as a "cruel act of political cowardice".
Trump switches the pressure
By Anthony Zurcher, BBC News, Washington
Candidate Trump promised to do away with Daca, despite warnings from a cross-party collection of politicians. Or, knowing this president, objections from "the establishment" only make him more determined to act.
Fortunately for him, unlike repealing Obamacare or building his Mexican border wall, he does not need Congress's help here.
In fact, by setting a six-month fuse on the effects of Daca's termination - and stretching the impact out over the next two years as work permits expire - Mr Trump puts all the pressure on legislators.
It will not be easy for Daca supporters in Congress. They will have to get legislation passed over the objection of immigration hawks in the House. It may also need 60 votes in the Senate to break a filibuster - from the right or even the left, if the bill is packaged with hardline immigration measures. What is more, Congress already has its hands full with other pressing issues - hurricane relief, budget resolutions, the need to authorise new government debt and, at some point, tax reform.
If Congress fails to act, Republicans with tough re-election races will be in a difficult spot, facing angry constituents just as the campaign season gets into gear.
The president, however, satisfies his anti-immigration base with this move - and washes his hands of the matter. The loyalists who have stood by him are rewarded, others in his party be damned.
What is Daca?
The programme, introduced five years ago, protects young illegal immigrants in the US from deportation and provides temporary permits for work and study.
In order to qualify for Daca, applicants under the age of 30 submitted personal information to the Department of Homeland Security (DHS).
They had to go through an FBI background check and have a clean criminal record, and either be in school, recently graduated or have been honourably discharged from the military.
In exchange, the US government agreed to "defer" any action on their immigration status for a period of two years.
How did Sessions justify scrapping it?
In a stinging attack on the policy introduced by President Barack Obama, Mr Sessions said: "Such an open-ended circumvention of immigration laws was an unconstitutional exercise of authority by the executive branch.
"The effect of this unilateral executive amnesty among other things contributed to a surge of minors at the southern border that yielded terrible humanitarian consequences. It also denied jobs to hundreds of thousands of Americans by allowing those same illegal aliens to take those jobs.
"The nation must set a limit on how many immigrants we admit each year. We cannot admit everyone who would like to come here, it's just that simple."
In his statement, President Trump recalled that his predecessor, Mr Obama, had bypassed Congress to introduce the policy, which was announced in June 2012.
"There can be no path to principled immigration reform if the executive branch is able to rewrite or nullify federal laws at will," Mr Trump said.
How does this affect current 'Dreamers'?
No new first-time requests will be acted on after 5 September, DHS Acting Secretary Elaine Duke said in a memo released after Mr Sessions spoke.
However, no existing beneficiaries of the policy will feel any impact for six months, the period of time allotted for Congress to "deliver on appropriate legislative solutions".
People who have current Daca work authorisation will be able to keep it until it expires while people whose permits expire in less than six months can renew before 1 October for another full two years.
How are supporters of the policy reacting?
In a statement, Ms Pelosi said President Trump had dealt a "stunning blow to the bright young Dreamers and everyone who cherishes the American Dream".
She called on Republicans in Congress to join Democrats in immediately moving to safeguard Daca recipients.
Amber Pinto, who works for immigrant activist group United We Dream, was amongst those who gathered outside the White House to demonstrate against the decision on Tuesday.
"I'm undocumented, unafraid and here to stay," he said to applause.
"I have the honour to serve as a deportation defence hotline manager for United We Dream, where every day my team and I get to hear stories from our communities on how their loved ones are being criminalised by law enforcement and terrorised by immigration agents."