He revealed that he has ordered officials to investigate "increasing the means at the disposal of police and criminal justice" to end the £380m black market.

Mr Woodward aired the idea while being quizzed in Westminster for the first time by members of the Northern Ireland Affairs Committee, who told him the " Mr Bigs" were enjoying an "open season".

The DUP's Sammy Wilson said officials knew the names of all the big players, including the owners of petrol stations who use the illegal fuel and the lorry drivers who transport it, but no action was being taken.

MPs were also critical about the one per cent conviction rate, adding that no offender had ever been jailed for the crime.

Mr Woodward told the committee: "One of the issues I am looking at, and I can't promise the committee that in the end there will be an offence, but one of the things I'm keen for us to look at is whether we might be able to create a specific offence of fuel laundering.

"That's going to involve a lot of work over the coming months. It may come

to nothing.

"One of the problems about seeking convictions is sometimes what you are trying to get a conviction for. One of the areas I'm anxious we pursue while we still have responsibility for policing and criminal justice is to see whether or not we have the means at our disposal to secure convictions of the people involved in this.

"If it were the case that we could find a definition of fuel laundering as an offence which might allow us to secure more successful convictions I think we would all be a lot happier."

Ulster-born MP Kate Hoey told the Secretary of State it was a "litmus test issue" for law abiding people in Northern Ireland.

The plan comes after a two-day Belfast Telegraph special report on fuel laundering.

We revealed that fuel crime was hitting taxpayers in two ways - the environmental clean-up costs for diesel laundering on top of the loss of public revenue.

The Telegraph revealed that acid residue dumped down drains after fuel laundering has already wrecked equipment at one of Northern Ireland's newest sewage plants.