Unions and MPs expressed alarm after an investigation by the Information Commissioner revealed that major construction firms broke data protection laws by paying for information on their employees.
Deputy information commissioner David Smith said information on around 3,000 workers was held by the Consulting Association in paper files and a card index database.
Around 40 construction companies would send the association lists of people they were considering hiring to work on building sites and would then receive details from their files over the phone, he said.
Notes about individual workers included descriptions such as "ex-shop steward, definite problems", "Irish ex-Army, bad egg", while others related to workers who had raised concerns over health and safety issues on sites, such as asbestos removal.
Mr Smith said the companies - including household names and major players in the industry - must have known that what they were doing was wrong.
Alan Ritchie, general secretary of the building workers' union Ucatt, said: "Ucatt members know from bitter experience of being refused work that blacklisting exists in construction.
"However, the extent of the practice and the fact that most of the major companies in construction are involved in the practice is truly shocking.
"It is outrageous that construction workers have been barred from jobs simply for being trade unionists."
Ucatt said it believed Consulting Association was run by an individual formerly employed by the Economic League, the company involved in most of the blacklisting in the 1970s and 1980s.
The revelation of widespread blacklisting has huge implications for construction safety, said the union, adding that Ucatt members and safety representatives have been victimised and dismissed after complaining and whistle-blowing about dangerous sites.
Mr Ritchie added: "Ucatt members have been working to reduce deaths and injuries on sites and trying to work with companies to achieve these aims. We now know that those same companies have connived to dismiss them and block their future employment."
The Government intended to make blacklisting illegal as part of the 1999 Employment Relations Act but the regulations were never introduced on the grounds that the Government believed blacklisting no longer existed, said Ucatt.
Mr Ritchie said: "Blacklisting remains rampant in the 21st century. We will be writing to the Government immediately, demanding that they bring forward the existing regulations and introduce them into law immediately. It is the only way to protect the rights of trade union members."
Labour MP John McDonnell (Hayes and Harlington) said: "This latest expose of blacklisting demonstrates that blacklisting is still rampant in some industries. The Government must act swiftly now to outlaw blacklisting once and for all.
"It is widely suspected that the Government caved in under pressure from employers' organisations when I raised this issue last time in Parliament.
"This new evidence demonstrates that the Government needs to act, and act now, to prevent this discrimination that can blight the lives of many workers."
Mr Smith told BBC Radio 4's Today programme: "It was a wide range of information about these workers, but not the sort of thing that you or I would want down about us.
"Some of it was to do with trade union membership, some of it could be used to unlawfully discriminate against people. It was the sort of information that nobody had a chance to correct or put their side on it.
"There are some indications that those who raised genuine safety concerns may have been prejudiced by this database."
Mr Smith explained the action being taken by the Information Commissioner's Office: "We are prosecuting the owner of this business, the Consulting Association, because he should have been registered with our office and he wasn't and that is a criminal offence. That's a clear prosecution.
"The construction companies that were his customers, we have to investigate and find out just what their involvement is, but we are looking to take enforcement proceedings against those who were involved and that will put them on notice that if they get involved in this illegal trade again, then they will face prosecution.
"What's so disappointing about this case is that we have got most of the major names in the construction industry there. They must have known that they were doing wrong. If not, why run this database underground? It has been going for 15 years.
"We wouldn't expect that sort of illegal activity from household names. Leaders of businesses really must get the message that they have got to take their data protection responsibilities seriously. They can't flout the law."
Business Secretary Lord Mandelson told BBC Breakfast: "I'm sorry the practices have taken place but I welcome the fact that the information commissioner, on the basis of the legislation that already exists, has stepped in and taken the action that he has.
"He will need to look into this further to see whether these practices are more widespread and take the appropriate action, as he's already done in this case.
"I'm glad the information commissioner has stepped in and the Government will certainly support him in any further measures he needs to take."
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