Although the plans are currently being put forward as part of a consultation process with employers and unions, there is little doubt, given the tone of the Government's rhetoric, that they will be introduced.

It is also proposed that for the first time businesses would have to pay interest or other cash to workers they have underpaid, as well as repaying arrears.

Trade minister Alistair Darling gave employers a stark warning: " Pay less than the minimum wage and it will cost you.

"When we brought in the national minimum wage, we worked closely with business to make sure it was introduced in a 'light-touch' way. It has become part of daily business life. No-one should be in any doubt as to what they need to do."

The minimum wage was introduced in April 1999. It is currently £5.35 an hour and rises to £5.52 in October.

The Government has helped tens of thousands of workers recover £22.6 million in unpaid wages, but up to now, employers have not been punished, as long as they pay up when they are caught.

The consultation will also look at enforcement of employment agency standards, seeking views on whether offences should be triable in the Crown Court, and whether the Employment Agency Standards Inspectorate should be given clearer investigative powers to obtain financial information on suspects.