Britain is considering plans to strike off company directors and seize the assets of firms caught employing illegal immigrants, newspapers reported yesterday.

Under the scheme being considered by the Home Office, the directors of firms found breaching immigration rules on two occasions could be dismissed under a ?two strikes and you?re out? plan, the Sunday Times and Sunday Telegraph said.

In addition, police could seize assets or profits proved to result from work carried out by illegal immigrants and the firms could be fined. The papers said companies could be penalised even if contractors or sub-contractors, rather than the firms themselves, were found to be using illegal immigrant labour.

This could affect large companies such as supermarket chains, the Sunday Times said. The Home Office would not confirm any details of plans being considered but a spokeswoman said proposals to reform the government?s immigration policy were under discussion.

Home Secretary John Reid is due to unveil later this week details of a shake-up of his department, which he described as being ?not fit for purpose? when he took over in May.

The number of illegal immigrants in Britain is estimated at half a million, and they are thought most likely to find jobs with fruit-picking firms and companies in the construction and leisure sectors.

Last month, the government denied it planned an amnesty for illegal immigrant workers.