Twenty- three cockle pickers drowned at Morecambe Bay

An "important distinction" must be made, the Recruitment and Employment Confederation (REC) says.

Labour providers also complain that the name of the new Gangmasters Licensing Authority (GLA), which will regulate them, has "negative connotations".

The GLA has now launched with final legislation still to be announced.

REC managing director Gareth Osborne said that the confederation broadly welcomed the GLA, set up after 23 cockle pickers died at Morecambe Bay.

Traditionally, a gangmaster in my mind is someone who organises itinerant labour working around the UK Andy Hogarth Staffline

But it was "extremely important" to make a clear distinction between illegal gangmasters and reputable employment businesses, he said.

"Illegal gangmasters routinely flout all employment and tax regulations, often using threats and intimidation against those operating lawfully.

"The public furore over illegal immigrants has overshadowed the fact that 70% percent of low-skilled jobs are filled by British passport holders," he added.

Andy Hogarth, managing director of Staffline, an employment agency specialising in blue collar recruitment, said his company could not currently compete with operators who ignored laws on the minimum wage.

"In the long term it will do our business good," he said.

'Not nice'

But he "hated" the use of the word "gangmaster" in the authority's name.

"Traditionally, a gangmaster in my mind is someone who organises itinerant labour working around the UK.

"It's not a nice name - it's tarring everyone with the same brush."

On Friday, the GLA's board members will be announced with a meeting to decide rules and regulations to take place at the end of the month.

The GLA will for the first time regulate those who supply workers to agricultural and shellfish businesses.

It will set licensing conditions and keep a register of labour providers.

It was set up under the Gangmasters (Licensing) Act, which came into force in July 2004.

Anyone who acts as a gangmaster without a licence will be breaking the law and companies who use an unlicensed gangmaster will also be breaking the law.

Offenders face up to 10 years in jail.

'Solvable problem'

A Defra spokesman said the act would provide transparency in the food chain for the first time.

"Licensing alone will not solve the problem of illegal activities by gangmasters, but it will make the problem solvable," he said.

"People will be able to establish who are legitimate labour providers, thereby helping to stamp out abuse."

Last week GLA chairman Paul Whitehead, the former chief of Sussex Police, said new powers were needed to extend the authority's scope into construction, catering and other areas outside agriculture.