Parents will be able to use an online database to check the backgrounds of nannies and tutors, under legislation published today.

The cross-party Bill is intended to close loopholes revealed by the Soham murders and by the recent furore over sex offenders working in schools.

Employers will also face tough penalties if they fail to carry out checks. Prison sentences of up to five years are possible if they knowingly hire sex offenders to work in any setting where children are present, even virtually, in internet chat rooms.

The creation of a single registration scheme for all people working with children or vulnerable adults was a central recommendation of the Bichard Inquiry, which uncovered "deeply shocking" failures in the vetting process that allowed Ian Huntley, a known sex offender, to get a job as a caretaker at Soham Village College in Cambridgeshire.

Huntley went on to kill two schoolgirls, Holly Wells and Jessica Chapman, in the summer of 2002.

"Today’s Bill will introduce a 21st century approach to the protection of children and vulnerable adults," said Ruth Kelly, the Education Secretary, launching the Bill today.

"It will fundamentally reform and rebalance vetting procedures so that children’s and other vulnerable people’s safety is unequivocally the first priority. This Bill brings forward root-and-branch reform I promised ensuring we have a far more comprehensive and coordinated system."

Following Sir Michael Bichard's recommendations, today's legislation, the Safeguarding Vulnerable Groups Bill, will allow anyone planning to employ a music teacher, a sports coach or a nanny to access a database with information about the applicant's past.

For the first time, the register will hold all vetting information from existing databases, including the Criminal Records Bureau, the Protection of Vulnerable Adults scheme, the Protection of Children Act scheme and the Department of Education's "List 99", made up of those barred from working in schools.

Vetting will be compulsory for those who work in schools, care homes, children's hospitals and a range of settings, including those who moderate chat rooms, described as "a public electronic interactive communication service" in the Bill.

If employers fail to carry out checks, they will be fined up to £5,000. Employers and employees who knowingly evade the system will face fines and prison sentences.

A spokesman for the Department of Education of Skills said it was not yet known how much individual checks will cost, but that it was envisaged that basic, online checks for parents would be free.

Those seeking clearance to work with children and vulnerable adults are expected to have to pay a similar cost as a current Criminal Records Bureau check, around £35, according to Alex Frean, Social Affairs correspondent for The Times. Volunteers will be checked for free.

The Bill also seeks to close the loopholes that have allowed at least 88 registered sex offenders to work in British schools, a revelation that forced Ms Kelly to fight for her Cabinet career in January.

The Bill will take away the power, formerly held by ministers, to make the final decision whether an adult can work with children. Instead, the responsibility will be handed to an independent panel. Those banned will have the right to appeal decisions, as they do now.

The row over ministers' control over decisions started late last year, when it emerged that the Department of Education had allowed a registered sex offender to work as a PE teacher in a Norfolk school despite a caution for accessing pornographic images of children on the internet. The PE teacher was removed from his job only when police protested.

Sir Michael, who has criticised the Government for the slow implementation of his recommendations, which were published in June 2004, said that he was pleased with the Bill.

"If enacted it will meet one of the key recommendations of my report - the need for a single routinely updated and easily accessible register of people who are not fit to work with children (and vulnerable adults). The decision of the Secretary of State to establish an independent board to take decisions is an additional and welcome refinement," he said.

But the National Society for the Prevention of Cruelty to Children (NSPCC), while welcoming the introduction of a central register, listed a series of continuing concerns over vetting procedures.

Mary Marsh, the charity director, said the register could create a box-ticking approach to child safety: "Employers must do more than just tick the ‘vetting box’, as many abusers are not known to the criminal justice system," she said.

Ms Marsh also questioned the time that the Bill's measures would take to enact, the register is unlikely to be up and running before 2008, and the likelihood that foreign care workers and teachers would still be largely unscreened.

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