Many homeworkers are being underpaid, often receiving less than £2.70 an hour, a report by the Equal Opportunities Commission (EOC) finds.
EOC chair Julie Mellor said that even under a proposed new system of calculating their pay rates, half of the UK's homeworkers could still be earning less than the minimum wage.
According to the study, as many as 70,000 homeworkers may not be receiving the minimum wage even though they are entitled to the statutory rate.
Mellor said new government proposals to change the way pay rates are set would help, but would not solve the problem.
"Our experience suggests that the vast majority of those who lose out will be women and most of them will be ethnic minority women.
"This exploitation should not be allowed to continue for years after the minimum wage was put in place,” she said.