TUC general secretary Brendan Barber said the union had not closed the door on supporting a commission to settle the dispute over proposed legislation to give temp agency workers equal rights to permanent staff.

Speaking at a CIPD meeting to discuss Andrew Miller's Private Member's Bill, which calls for equal pay and conditions for agency workers, Barber said legislation was the only way to stop the many examples of "absolutely abusive exploitation" from agencies and employers on temporary staff.

He told Recruiter: "We do not want to see any undue delay in making progress on the issue. We don't want a process undermining other European standards. We are in no way supporting a UK opt out which could somehow be legitimised by a commission process."

John Wright, chairman of the Federation of Small Businesses, described the proposed legislation as "heavy handed", and argued that it would create much more bureaucracy for already overburdened small firms.

Wright, who represents, over 200,000 small firms, said small businesses who rely on agency staff to cope with peaks and troughs in demand and sickness would be discouraged from taking on temps putting additional pressure on bosses.

"I value my agency staff and I pay them above the going rate because they work flexibly and at short notice. I am concerned this will force me and my members to pay staff at a lower rate and they will no longer want the work."