Companies bidding for government contracts would have to prove their commitment to a diverse workforce under new proposals to tackle unemployment among ethnic minorities.
The plans, put forward by a committee including seven government ministers, are being piloted in three sectors with a view to rolling them out across the country at a later date.
The aim is to tackle the high levels of unemployment among ethnic minorities, which official figures show is 15 per cent lower than among the general UK population.
Firms bidding for public service contracts would have to show how many people from black and ethnic minorities they employed, and this would be compared with the local population as part of the tendering process.
The idea provoked immediate alarm among business leaders, despite claims by government officials that they were subject to consultation with industry and unions.
"The way to address high unemployment in some ethnic communities is not race quotas but by equipping workers with the skills businesses need," warned Sally Low, director of policy at the British Chamber of Commerce (BCC).
She added: "Firms will not welcome more bureaucracy to wade through in the process of tendering for public contracts where it is already very difficult, particularly for smaller businesses, to break through and get government work.
"These proposals could lead to a situation where firms able to offer a competitive service are dissuaded from pitching for government work."
Iqbal Wahhab, the chairman of the ethnic minority advisory group and a member of the cross-governmental committee that came up with the idea, defended the proposals, insisting they did not mean the introduction of ethnic quotas in tendering.
But he warned that the rate at which unemployment was rising among ethnic minorities meant it would take 100 years to reach the national average. "We shouldn't have to be in this situation in the first place," he told politics.co.uk.
Calling on bidding firms to explain their diversity policies was a "powerful mechanism", although he stressed the pilot schemes - with Job Centre Plus, the Identity and Passport Agency and the Department for Education and Skills - were merely "exploratory".
Mr Wahhab also made clear that it would be "crazy" to proceed with the plans without the support of business, saying: "We have to keep an open mind and have to do it with consensus - you cannot force business, and we do not want to go down that route."
Today's proposals were only one of a series of ideas to boost employment among ethnic minorities, of which the government's pledge to abolish child poverty was a key part, the businessman said.
He also made clear the government was not proposing a return to contract compliance, where Labour local authorities in the early 1980s refused to give contracts to ideologically suspect firms, such as those that traded with apartheid South Africa.
This practice was scrapped under the Conservative government, which insisted contracts for local government should only be awarded on the basis of commercial matters. These did not include employment matters, a firm's industrial record or its political affiliations.