Private businesses will be able to gain access to details of public sector contracts under the new Freedom of Information Act.

This means that with effect from 1 January, 2005, recruitment firms will be able to request information on public sector tenders.

Although public sector bodies are obliged to tell firms why they did not win certain contracts, this information has so far not been available to those not involved in the bidding.

Joanna Bussell, a partner at law company Lawrence Graham, said the new law could open up vital information on government bidding processes to recruitment agencies.

The new legislation will also allow members of the public to gain access to information on public services such as hospitals and schools.

The secretary of state for constitutional affairs Lord Falconer said that similar regimes in other countries had been welcomed by private sector companies looking for information about public sector firms seeking contracts or tenders in which they also had an interest.

More than 100,000 public authorities are subject to the act.