Corporate tax dodgers will be banned from competing for government contracts under plans being drawn up by the Treasury and Cabinet Office, Danny Alexander has said.
The Treasury Chief Secretary said "if you want to work for us, you should play by our rules", as he revealed officials were working on a way of making sure firms were not avoiding tax.
In his keynote speech to the Liberal Democrat conference in Brighton, Mr Alexander said there are no measures in place to prevent companies exploiting loopholes to limit their tax liabilities.
He said: "There are thousands of large firms that receive taxpayers' money to deliver a service - they do a good job helping to deliver public services.
"But I have discovered that there is nothing that prevents the very small minority of firms that don't play by the rules from winning government contracts.
"That is not right. That is not fair. And I am determined that it comes to an end.
"If you want to work for us, you should play by our rules. Taxpayers' money should not be funding tax dodgers. So I have tasked HMRC and the Cabinet Office to come up with a workable solution to this problem and we will set out more details later."
Earlier this week Mr Alexander revealed that a crackdown on tax was being extended to people with houses and assets worth more than £1m.
Scores more staff are being recruited to HM Revenue -amp; Customs' "affluent unit" to make sure the wealthy pay their dues.
Meanwhile GROW NI, the umbrella body formed to campaign for a reduction in corporation tax in Northern Ireland, has reiterated the support of the business community for the devolution of tax varying powers.
Spokesman Eamonn Donaghy said the five main parties are behind the campaign to reduce corporation tax locally, as are the main business organisations.
"The issue is now political and whether or not we get a devolution of the powers is down to the Chancellor and the Prime Minister," he said.
"Our own politicians have made their views known and played a full part in the ministerial working group, but those efforts must now be stepped up."