Industry minister Jo Swinson faced a torrent of demands from MPs yesterday to act against "shameful" blacklisting of workers by bosses colluding with Britain's secret police.

The Liberal Democrat minister repeatedly expressed her opposition to the "abhorrent and illegal" practice of blacklisting.

But she refused to be drawn into promising tougher laws and criminal penalties against offending companies or a full-scale public inquiry.

Ms Swinson was interrupted by Labour MPs when she claimed during a Westminster Hall debate that there were "significant powers in place to deal with this issue."

Scottish select committee chairman Ian Davidson MP asked how the existing powers could possibly be adequate when blacklisting had been uncovered at the Crossrail project in London.

Fellow Labour MP Michael Meacher sternly reminded the minister that although it was illegal to maintain and compile a blacklist, it was not illegal to use a blacklist or to supply information for one.

Mr Meacher also spoke of the "dynamite" revelation arising from the Independent Police Complaints Commission that "all special branches" of the police were likely to have been involved in supplying information to blacklisting companies.

If proven, this would be "a monumental scandal" and a massive breach of human rights on a bigger scale than the media-hacking scandal.

Ms Swinson would not be drawn any further than stating that "of course we will look again at whether there are any gaps in the legislation."

Labour shadow minister Iain Wright paid tribute to unions Ucatt, GMB and Unite for their exposure of blacklisting which "shames this country."

Mr Wright demanded an investigation following reports in the Observer newspaper of police special branch collusion.

He pledged that a Labour government would hold a full-scale inquiry into blacklisting and he praised the Welsh government for taking action to bar blacklisting companies from public projects.

Hampstead MP and actor Glenda Jackson launched yesterday's debate against the "abhorrence" of blacklisting in Britain, likening it to activities of "the nefarious Senator McCarthy" in the US.

Many of her actor colleagues had suffered grievously from McCarthyism, she recalled.

Lone Tory MP Stephen McPartland attended the debate and revealed that he was joining a campaign with left Labour MP Kelvin Hopkins and the GMB union to help fight the "terrible disease" of blacklisting.