The Government yesterday announced a fresh crackdown on rogue employers amid complaints that workers were still being exploited and abused.
Business and Enterprise Secretary John Hutton unveiled a package of new measures after acknowledging that some agencies continued to flout employment law.
He told the TUC Congress in Brighton enforcement of the minimum wage and other rights would now be stepped up.
"We are substantially increasing investment in enforcing the minimum wage. Where there is underpayment I can confirm today that employers will face an increased maximum fine and workers will get fair arrears of wages reflecting the current value of the wage they are owed."
Mr Hutton also pledged to root out abuses in employment agencies and revealed that the number of inspectors overseeing standards in the sector are to be doubled.
"We will go further to crack down on rogue agencies. We will raise the possible penalty for abuses to an unlimited fine and we will legislate to end the suspect practice of forcing agency workers to pay for accommodation or transport - giving them for the first time a real choice and a right not to take services they don't want to use."
Unions have been pressing the Government to sign up to a proposed European Union directive giving new rights to agency workers but Mr Hutton stressed there should be a balance to equal treatment with a determination to protect jobs and giving people the choice agency work could offer.
Tony Woodley, joint general secretary of Unite, responded: "Mr Hutton spoke some fine words but it is this Government which has blocked the progress in Europe he now says he wants. Let us have some clear commitment on legislation and let us see some action."
However, Mr Woodley welcomed Mr Hutton's announcement of a crackdown adding: "We need rigorous enforcement of existing laws, making examples of the worst employers who should go out of business or be sent to jail."
Richard Lambert, director general of the CBI, said there should be no hiding place for firms which operated outside the law.
He told the TUC conference this week that such firms should be "clobbered" although he continued to voice opposition to the EU directive on agency workers.
Matthew Knowles, of the Federation of Small Businesses, said he welcomed the crackdown on rogue businesses because they undercut honest firms.
He also spoke out against the Agency Workers Directive which he said would hit the UK's flexible labour market.