A regulator will be created to prevent an Enron-style corporate collapse in Britain.

The reforms, announced by Trade and Industry Secretary Patricia Hewitt, are also intended to strengthen the accountancy and audit professions.

Ms Hewitt said: "We owe it to savers, investors and employees as well as honest business people to ensure our defences are as robust as they sensibly can be."

The wide-ranging package follows the recommendations of two reviews.

Ms Hewitt said the regulator would set accounting and auditing standards, enforcing and monitoring them as well as overseeing the regulatory functions of the existing accountancy bodies.

The announcement was interpreted as a signal that the Government believes the structure of Britain's auditing firms, the rules governing their conduct and the nature of their relationship with clients are sufficiently robust to eliminate the risk of an Enron-style scandal here.