The home secretary has defended the government after claims she tried to cover up an immigration scandal.

Jacqui Smith made a statement to the Commons after it emerged she had been made aware in July that thousands of illegal immigrants had been cleared for security work in sensitive locations.

Internal memos published in the Daily Mail suggested that the cabinet minister agreed that the problem was "not ready for public announcement".

Speaking to MPs on Tuesday afternoon, Smith said that until the establishment of the Security Industry Authority in 2003 the industry was "largely unregulated".

The SIA's job was to check that applicants were "fit and proper", she said, but not to decide if they were allowed to work in the UK.

"It's the legal duty of all employees to ensure that those they employ are entitled to work in the UK," she said.

"The SIA has not failed to do anything it was obliged to do in law."

As a "responsible organisation", Smith said, the authority decided in April 2005 to start checking 10 per cent of non European Economic Area applicants to see if they had the right to work in the UK.

Between April 2005 and December 2006, 41 were identified and their licence refused. Ministers were then informed in April this year, Smith said, that 44 people without the right to work in the UK had been cleared and were guarding "locations under Metropolitan Police contracts", including a facility for repairing modified cars - an apparent reference to the site where the prime minister's car was stored.

From July 2 this year, every non EEA applicant has had their right to work checked, Smith said. Since then, of 32,000 licence decisions, 740 had been refused on those grounds.

But it remains unclear how many of those granted licences between 2003 and July 2007 did not have the right to work in the UK.

She said: "My approach was that the responsible thing to do was to establish the full nature of the problem and then take appropriate action to deal with it, rather than immediately to put incomplete and potentially misleading information into the public domain."

The SIA and the Borders and Immigration Agency have so far checked 6,000 of an estimated backlog of 40,000 applications, she said.

Of those, unverified figures suggested 77 per cent had the right to work, 10.5 per cent did not, while checks were still being made on 12.5 per cent.

"I believe this is a very clear example of the government's determination to put in place effective systems and procedures to further protect the public and to keep those systems under review," she went on.

The checks would be finished in December, Smith said, when she would report back to Parliament.

'Cover-up'

Shadow home secretary David Davis, replying to her statement, said the response of the Home Office "has been blunder, panic and cover-up".

"The home secretary says this was because the analysis of the issue was not complete," he said.

"Let's be clear about this: They have known about the problem since April."

He went on: "It's now November, this House has been sitting since early October. Is this really the first opportunity she had to tell the House about this?"

Davis questioned why Smith had not put forward proposals to give the SIA a statutory duty to check the immigration status of applicants.

"The home secretary no doubt regrets not making this statement some time ago," he said.

"The prime minister spoke of frank and candid government. Yet in one of her first acts as home secretary she put avoiding political embarrassment ahead of solving the problem and informing the public."

Emails

An email from Smith's private secretary published in Tuesday's Mail, dated August 9, said the home secretary "agrees... that this is not ready for public announcement yet".

"She did not think the lines we have are good enough for press office or ministers to use to explain the situation," the email said.

"In particular the fact we are improving the system and the fact that prior to the SIA there was no system at all, do not come across strongly enough."

Two further emails to Smith discuss likely press criticism should news of the problem come to light.

One from the Home Office's policing policy and operations directorate said: "Press office advise that should the media discover that a Home Office NDPB [non-departmental public body] has issued thousands of licences to illegal workers and that some of those workers have been employed in high-profile security jobs, there will be significant criticism of the Home Office and our processes."

Number 10

Downing Street defended the home secretary, while refusing to say when she first informed the prime minister of the problem.

The prime minister's spokesman said that Smith had spoken to Gordon Brown about the issue that morning and he had been "satisfied with the explanation".

"What's clear is that when the issue arose and was identified in the Home Office, action was taken to deal with illegal working in the security industry," the spokesman said.

"From July this year applicants have only been granted a licence if they are entitled to work in the UK."