Construction minister Nigel Griffiths was due to hold an urgent industry summit on Wednesday to discuss concerns arising since the arrival of 10 new member states to the European Union on 1 May.
As Building went to press, union leaders and employer representatives were meeting Griffiths and his DTI ministerial colleague Gerry Sutcliffe to press for government action.
The industry is calling on the government to insist that foreign workers are employed on the same basis as British workers and are not excluded from any negotiated collective agreement.
The unions particularly object to the government's interpretation of the European Posted Workers Directive, which says firms employing temporary foreign workers must only pay the UK minimum wage.
Cases of exploitation are political dynamite for the government
UCATT leader George Brumwell
The unions say the government must stipulate that foreign workers are paid the same rates as UK workers – invariably much higher than the national minimum wage.
The government is understood to want to avoid further political embarrassment over Europe after the success of the United Kingdom Independence Party in last week's European election.
M&E union Amicus has already held a march at the end of last year on Westminster over fears that UK workers will lose out to cheaper foreign labour.
George Brumwell, the general secretary of UCATT, said there was a stronger understanding in government now that it must deal with the issue of foreign labour exploitation.