Agency staff will enjoy the same employment rights as permanent staff under new proposals agreed today between the government and unions.

The legislation to guarantee the UK’s 1.4 million agency staff equal treatment is to come in this autumn, depending on a similar EU directive being passed before then.

Under the proposals, agency workers will be given equal pay and holiday entitlements after 12 weeks in a job.

Employers associations, led by the CBI, had lobbied for a period of at least six months arguing that the proposals could lead to firms taking on fewer employees or even letting staff go. They described today’s agreement as the "least worst option".

Unions, which have campaigned for the measure for years, said the agreement offered much stronger legal protection.

It comes after months of debate between unions and employers and amid growing pressure by Labour MPs including John Prescott, the former Deputy Prime Minister, and Peter Hain, the former Secretary of State for Work and Pensions.

The new agreement does not cover sick pay or pension payments, and temporary staff will have to work the same length of time as full-time workers to get paid maternity leave.

Gordon Brown has said the current situation, in which agency workers can be paid less for doing the same job as full-time staff, is "unfair".

More than a third of MPs, including John Prescott and Peter Hain, backed a private members' bill on agency workers rights in February.

Members of the European Union are currently debating legislation on the issue and a number of key issues remain undecided. The UK government will only be able to implement legislation when Brussels passes a directive.

John Hutton, Secretary of State for Business, said: "The agreement achieves our twin objectives of flexibility for British employers and fairness for workers."

"It will give people a fair deal at work without putting their jobs at risk or cutting off a valuable route into employment."

Opposition MPs were quick to attack the agreement.

Jonathan Djanogly, shadow minister for employment and corporate governance said: “This deal represents another blow to Gordon Brown’s authority. While his own ministers have been lobbying against this legislation in Parliament and in

Brussels, the Prime Minister has had to back down in the face of massive union pressure and backbench rebellion.

“The truth is that as Labour falls further into debt, they can no longer afford to say no to the unions. Business will be dismayed that at the time when they most need a Government to be on their side, they have a Government which is getting on their backs.”

Half of agency placements last for less than 12 weeks, according to the CBI, which should men that firms would be protected while trying to fill short-term vacancies at busy periods.

John Cridland, CBI deputy director-general, said: "Agency work is good for temps and for the firms that use them and forms a central plank of the flexible labour market that is so important to our country's prosperity."

Martin Temple, chairman of the Engineering Employers Federation said: “This is a bad day for business and represents yet another brick in the wall of labour market rigidity in the UK. At a time when business needs all the tools at its disposal to work flexibly and be quick on its feet, it is very unhelpful to add further constraints on the use of agency workers.”

TUC President Dave Prentis, general secretary of Unison, said that the announcement was “unfinished business” from the Warwick Agreement - the deal the government made with unions before the last general election.

TUC general secretary Brendan Barber said: "The agreement now opens the door to the much stronger legal protection that agency workers deserve, as our Commission on Vulnerable Employment so graphically highlighted."

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