The Secretary of State for Social Security, Peter Lilley, has ordered his officials to have the service operating by the end of the month.
The scheme, which has been under consideration for several months, was given a boost by the success of the hotline to expose benefits cheats which attracted 12,500 calls in the first week. Hundreds of calls were from people reporting allegedly dishonest employers.
Most allegations concerned businessmen paying lower rates to men and women who they encouraged to continue signing on for the dole.
Mr Lilley believes that the role of employers in the black economy has not been fully exposed by normal investigation, and pilot schemes have revealed a demand for the service.
Most of the fraud is concentrated in small building companies, cleaning firms, restaurants and the rag trade in the East End of London.
The new scheme will help the Government to deflect criticism from the Labour Party and others who accuse ministers of ignoring fraud perpetrated by businesses.Reuse content