Employers who take on illegal immigrants could be forced to hand over their profits, according to the Birmingham MP charged with sorting out chaos in the immigration system.

Liam Byrne (Lab Hodge Hill) is considering using the Proceeds of Crime Act, which was designed to stop drug-dealers and organised gangsters keeping their ill-gotten gains.

It would mean unscrupulous employers who knowingly recruit illegal immigrants could have their homes and cars confiscated - with the money used to pay the costs of deporting their staff.

But Mr Byrne sparked more controversy when he appeared before the House of Commons Home Affairs Committee yesterday, by refusing to rule out an amnesty for illegal workers. It followed protests in the US in which campaigners demanded an amnesty for America's 11 million illegal immigrants.

Asked by committee members whether the British Government would consider an amnesty, Mr Byrne refused to rule it out and said he had asked officials to prepare a report on the issue.

Pressed by MP Mark Salter (Lab Reading West) for an answer, he said: "It is too early to tell. I'm one of those people that has to have that analysis in front of them."

The comments contrasted with the line taken by previous Home Secretaries and Immigration Ministers, who have ruled an amnesty out.

Speaking after the hearing, he said: "An amnesty is not on my agenda, full stop."

Mr Byrne said the Government would make illegal immigration less profitable.

Speaking to The Birmingham Post, he said: "We will punish businesses who employ people illegally if they know what they are doing.

"And we will step up the offensive to deny benefits to people who are here illegally.

"This country has a very proud tradition of giving a home to brave people who are fleeing turmoil and despair.

"We expect people to play by the rules, and we have to be tough on people who come here illegally."

He said Birmingham residents from all ethnic back-grounds were concerned about illegal immigration and abuse of the asylum system.

"There is very wide support for a system of fair play. This has been forcefully put to me by many sections of the community. It is something that the metropolitan liberal elite i n London don't quite understand."

Mr Byrne said he was shocked when John Reid, the Home Secretary, telephoned him less than a fortnight ago and asked him to take responsibility for immigration policy, the biggest problem facing the Government at the moment.

"I had just left the house on a Saturday night with my wife, as we were celebrating her birthday. It was a Noel Coward play at the Birmingham Rep. I have to confess, my first thought was one of shock. I don't think I replied for 30 seconds or so. But it is an issue I have talked a lot about as an MP in Hodge Hill for the last year and a half.

"What people want is an A1 system which is fair and efficient, and the truth is they don't think they have got that.

"This is a big job for me, but I didn't get into politics to sit in the shadows."

Chaos in the immigration system led to damaging revelations for the Government, which led to the sacking of former Home Secretary Charles Clarke last month.

Mr Byrne has until July 25 to devise a plan for turning the Immigration and Nationality Department around.