The government has ordered a formal inquiry into the accounts of MG Rover.

Trade and industry secretary Patricia Hewitt said an independent financial regulator would review the accounts of the collapsed car company.

"Yesterday I asked Sir Bryan Nicholson, who is chair of the Financial Reporting Council, to investigate the accounts of MG Rover and all its associated companies over the last five years so we can that find out what has happened to the money," she said.

Hewitt added that the workers - some 5,000 of whom are now receiving redundancy notices - were feeling "pretty sick" that some directors had made large amounts of money from the company.

"Where entrepreneurs take a risk they should be entitled to big rewards for big success," she said.

"But that is not what we are talking about here.

"They did not put up huge amounts of money, the company has not been a success and it was virtually given to them by BMW."

However, Conservative spokesman Caroline Spelman said the investigation should cover the negotiation process which had attempted to save Rover's Longbridge plant.

"The Department of Trade and Industry were very supportive of the Phoenix bid over alternatives and also were involved behind the scenes in the negotiations between the Chinese company and Rover," she told BBC Radio 4's Today programme.

Liberal Democrat industry spokesman Malcolm Bruce also said the inquiry should be wide-ranging.

"If there is an enquiry into the collapse of MG Rover, then it must be at arms length from government and focussed on what can be learnt," he said.

"There are a number of questions that need to be answered that relate to the conduct of the government and the DTI as well as the Phoenix directors."