The Federation of Small Business (FSB) has fiercely criticised a report on small businesses by the TUC, which it said was "flawed and misleading".

Earlier this year the TUC published a report that said the importance of small businesses to the UK economy and job creation had been exaggerated and called for a shift in the government's enterprise policies.

The move enraged small businesses and entrepreneur Sir Richard Branson, who pointed out how many international companies had started out small.

Now the FSB has launched its own report using the same figures as the TUC in an attempt to counter the union arguments and head off any resulting shift in government policy.

It argued that the TUC's statistics were flawed because they had failed to acknowledge a whole number of small firms and had confused the private and public sector.

The document, entitled Small Firms And Job Creation, showed that between 1995 and 1999, the net number of jobs created by small firms was 545,000 compared to just 218,000 by large companies.

Wednesday April 30 2003