The government is considering creating a central employers' liability fund which would pay compensation to workers who develop a serious industrial disease and cannot find insurance elsewhere.
In a consultation which opened yesterday, the government has said the creation of Employers' Liability Bureau (ELIB) would require all employer liability insurance policies to include a small premium, which would be paid into a central fund.
If a worker developed a serious work-related illness and no insurer could be identified, the individual would be paid compensation by ELIB. Currently in such circumstances individuals receive no compensation.
Construction union Ucatt, which has regularly lobbied the government for the establishment of the fund, said the consultation was "excellent news".
Alan Ritchie, general secretary, said: "Far too often workers develop life-threatening illnesses because employers have failed to provide adequate protection from harmful substances. If a worker's health is ruined they deserve compensation. By establishing ELIB, the government will ensure this occurs."
The Department for Work and Pensions is also investigating the creation of an Employers Liability Tracing Service, which would help people track down their employer's liability insurance policies and help to speed up compensation payments.
DWP minister Lord McKenzie said: "Far too many people suffering from serious industrial diseases are unable to trace their insurance polices and get the compensation they deserve.
"That is why we want to set up a better tracing service with a dedicated database to help them track down these policies, and a fund of last resort if all else fails."
It is envisaged that ELIB would operate in a similar manner to the existing Motor Insurance Bureau, which provides compensation to car owners who are involved in accidents with uninsured drivers.