Gordon Brown faced his first challenge from the Labour backbenches yesterday when his MPs turned out in force to back a Bill giving agency workers the same rights as other employees.

The Temporary and Agency Workers Bill was backed by 147 votes to 11 against the advice of ministers.

The vote is a headache for Mr Brown because of strong misgivings in industry, although it will be stopped at later stages of its passage because of the Government’s opposition.

The Prime Minister is instead proposing a commission of inquiry under Sir George Bain, a device similar to that which led eventually to the national minimum wage, to look at the whole question of agency workers’ rights. Mr Brown will meet union leaders on Monday to discuss the idea.

Pat McFadden, the Business Minister, hailed the commission as “a constructive and positive suggestion to try and make progress in a way that offers real protection yet takes account of the specific conditions of the UK labour market and gives both unions and business a voice on the outcome”.

He told MPs that what was really needed was better enforcement of existing legislation and warned of problems with Mr Miller’s Bill, including the qualifying period, coverage and how to calculate equal treatment.

The Government had serious reservations about its impact and could not support the legislation but would not oppose it at this stage, he said.

Opening the Bill’s second reading debate, its sponsor, the Labour MP Andrew Miller, said that it was “morally right” to tackle the “exploitation” of agency workers. More rights for agency workers were in the “best long-term interests of the economy”.

The Bill is at the centre of an intense behind-the-scenes tussle between employers, trade unions and the Government. The CBI gave warning yesterday that the changes could lead to 250,000 job losses and would dent the UK’s flexible labour market.

But union leaders support the legislation and have been involved with lobbying of Labour MPs to back it.

Mr Miller said that he was facing the same “doom merchants” who opposed the minimum wage and gave warning of huge job losses.

The Bill now goes into committee, where Tory pressure for amendment and a lack of government support are likely to kill off any prospect of it becoming law.

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