Primark has hit the headlines in a storm over illegal workers.

The budget fashion store has apparently been using a supplier which employed illegal immigrants from India, Pakistan and Afghanistan at below minimum wage. The illegal practice was uncovered by an investigation by the Observer.

The investigation focused Manchester's textile industry, particularly TNS knitwear, who supply 20,000 pieces to Primark every week and Fashion Waves, a supplier used by TNS. An undercover journalist found that workers were been paid just £3 an hour and some employees were caught by a hidden camera admitting that they were illegal immigrants.

Primark said it was "extremely concerned" by the allegations and has launched an enquiry. TNS knitwear has denied any wrongdoing.

A Primark spokesman told the BBC: "Primark is conducting its own investigation. Once that investigation is completed, it will decide how to proceed. Meanwhile, Primark has handed all relevant information passed to the company over to the relevant enforcement agencies so they may take action."

The breaches of employment and immigration law could result in fines of up to £10,000 for each illegal worker and possibly prosecution for tax evasion and employment law abuse.

This is the second time that Primark has courted controversy over business practices. In June last year the store dropped three Indian suppliers for allegedly sub-contracting work to firms which use child labour.

On Saturday, Primark agreed to remove references to the Ethical Trade Initiative, the trade body which monitors Britain's top retailers, from shop windows.