Other offences being targeted include "cut and shut" jobs, where two halves of old, damaged or stolen cars are welded together to create a new vehicle.

"[The industry] is prepared to work with government to eliminate the criminal element that has dogged it for so long.

Motor Vehicle Dismantlers Association

Unlike the scrap metal industry the motor salvage industry is not currently regulated, leaving opportunities for unscrupulous traders.

Organisations within the motor salvage industry have welcomed the proposals, which they say will help stamp out crime and create a more level playing field for dealers.

Under the proposed regulation, industry members would need to register with an appropriate authority, said Home Office minister Mike O'Brien.

Appropriate records

They would have to maintain appropriate records of purchases and disposals, and demand identification checks for both vendors and purchasers.

Police and other investigators would have the right to enter and search premises - in the case of the police, without a warrant.

"Britain has a deplorable record on car crime. The government is determined to make sure that changes," said Mr O'Brien.

UK car crime

120,000 vehicles stolen annually Theft and insurance frauds cost �191m 25% of stolen cars are 'rung' 40% of stolen cars are broken up for parts Source: Home Office

He said the measures would be a step forward in achieving the government's target of a 30% drop in vehicle thefts over four years."

The regulation proposals have been widely welcomed by the motor trade and associated organisations, which include the Vehicle Crime Reduction Action Team (VCRAT), the British Vehicle Salvage Federation and the Motor Vehicle Dismantlers Association of Great Britain.

Ken Williams, chief constable of Norfolk Constabulary and a VCRAT representative, said: "There is compelling evidence that lack of regulation in the salvage industry is one of the main reasons for the low recovery rate for stolen vehicles in Britain."

'Greater stability'

John Hesketh, Chairman of the Motor Vehicle Dismantlers Association, also welcomed the initiative, which he believed would bring greater stability to the motor salvage industry.

"This is a great opportunity for an industry which has suffered a low public image for a long time to show that it is both professional and accountable, and that it is prepared to work with government to eliminate the criminal element that has dogged it for so long." he said.

Penalties for non-compliance have yet to be decided but may be similar to those in the Scrap Metal Dealers Act 1964 which reach up to �1,000 for a registration breach or for failure to keep the required records.

The cost to businesses of the proposed registration scheme is estimated to be between �15 and �50 a year, depending on the size.

Home Secretary Jack Straw made beating car crime a priority for police forces in England and Wales when he announced crime reduction targets in February.