MP Gordon Prentice is urging ministers to launch a nationwide tenancy deposit scheme to stop landlords illegally withholding money from rent book holders who leave their premises.

The Pendle Labour MP wants the measure included in the forthcoming Housing Bill soon to be debated at Westminster.

Under the scheme the deposit would be held by a third party so that the landlords could not refuse to return it to a tenant without good cause.

Mr Prentice said: "Independent surveys show that one in five tenants have had part of their rent deposit unreasonably withheld by a private landlord. This amounts to a staggering £20million unreasonably withheld each year.

"The only way for tenants to recover this money is to bring proceedings to the county court and many people simply cut their losses. In some circumstances, the loss of deposit can be such a barrier to obtaining a new tenancy that people end up homeless.

"I think it is time for the introduction of a nationwide scheme to safeguard deposits and guarantee prompt settlement of disputes.

"The proposed scheme will see that deposits are collected and held by a third party and disputes over the return of deposits would be subject to adjudication by the Independent Housing Ombudsman.

"This is something I have been concerned about for many years, following approaches made to me by constituents who have had deposits withheld for what often seems very spurious reasons.

"I do hope that we see an early introduction of such a safeguarding scheme."