Samantha Morton will star in The Libertine

Government spokesman Lord Davies said the move would end the loss of �100m a year through abuse of the tax system.

But Conservative Lord Trefgarne asked him: "Are you proud of the fact that... a number of film workers have been put out of work or are you ashamed?"

Lord Davies said he "appreciated it has had effects on the film industry".

He said tax relief available to the industry extended to about 15% of production costs but that rogue companies were taking such exemptions as high as 45%.

"Several films were in production, based on this type of finance, and are now looking for other areas of finance which do not fall foul of the new requirements," he said.

Saved

Liberal Democrat spokesman, Viscount Falkland, said the industry had not expected the action to be so "abrupt" and to have "such a retrospective flavour".

Lord Davies replied it was not retrospective and only stopped abuse from 10 February when the loophole was closed.

"The Chancellor has made clear that we will be looking towards ensuring that there is proper consideration for the film industry in the next Budget statement," he said.

Jude Law's new film Tulip Fever was halted after the government decision and Johnny Depp's movie The Libertine was also in doubt until it was saved when the Isle of Man Film Commission stepped in.

The film, which also stars Samantha Morton and John Malkovich, began shooting earlier this week.

Malkovich, who is also the film's producer, told the Daily Telegraph he feared film-makers would go abroad to shoot their movies without tax breaks in the UK.