Gordon Brown plans to curb excesses arising from the unique tax status enjoyed by wealthy foreigners living in Britain but will not take action in next week's Budget, the Treasury admitted last night as MPs from all parties condemned the failure to close loopholes. Downing Street also said it was committed to reforming tax laws.

A Commons motion and a series of parliamentary questions were tabled on the scale of tax losses allowed by the loopholes, revealed by a Guardian investigation yesterday.

John McFall, Labour chairman of the all-party Treasury select committee, recalled that Mr Brown persistently challenged the system when shadow chancellor. "We seem to have one of the most lax non-domicile rules of any country. This clashes with the Labour government's fairness agenda. We don't want to drive people away, but we do want everyone treated on the same level playing field," he said.

Treasury officials confirmed that Mr Brown is examining ways of time-limiting the number of years foreign-born residents can retain non-domicile resident status, as many EU states already do. But the issue is such a minefield that there will be extensive consulation before any action is taken, possibly later this year, the Treasury said.

"Harold Macmillan had a go in the 1950s, Denis Healey in the 70s and Nigel Lawson in the 80s. They didn't really make much progress," admitted one official familiar with the arrangement that dates from the imperial era.

The Treasury estimates that there are around 60,000 non-domiciled residents in the UK, mostly financial specialists working on short-term contracts in the City whose expertise is useful. "They are very different from people who effectively have their main home in the UK but (benefit) from our peculiar type of tax system," said one insider.

The Guardian's investigation into the tax affairs of Britain's wealthiest "non-dom res" - the Swedish industrialist, Hans Rausing whose family fortune is worth £4.5bn - aroused anger or dismay among MPs of all parties, including "old-fashioned patrician Tories" who believe the rich should pay their way.

One Labour MP, Tom Watson, a member of the Commons home affairs committee, called on ministers to act quickly. "It is a loophole the government must plug," he said.

Another Labour backbencher, John Cryer, tabled a Commons motion "noting with alarm the story in today's Guardian about using tax loopholes to save millions of pounds in potential tax liabilities" and calling on the government "to tighten tax legislation to ensure that wealthy individuals and corporations pay their fair share in tax".

John Monks, TUC general secretary, said: "The Guardian's revelations that the super-rich can effectively avoid tax will add to the sense of unfairness that most employees feel when they see just how much faster boardroom pay is rising than everything else. The government can and should look closely at some of these tax loopholes."

Senior Liberal Democrats, who were already investigating the favoured tax status of Labour donor and Indian steel magnate, Lakshmi Mittal, also demanded an end to non-domicile residence. The party's Treasury spokesman, Matthew Taylor, said: "We cannot see any way in which the Treasury would not gain or the British economy lose from such a change."

More surprisingly, David Heathcoat-Amory, a former Tory Treasury minister in charge of closing tax loopholes, expressed surprise that Mr Brown has not done more - though he admitted it is a hugely complex field.

"I believe the rich and famous should pay their way. That is an old-fashioned Tory paternalist view. What I would do is set up an investigation, an inquiry into this. But Britain is an open trading nation and can't step too much out of line internationally," the MP told the Guardian.

Norman Baker, the tenacious Lib Dem MP for Lewes, tabled a series of Commons questions to the chancellor - who avoided the issue at question time yesterday - seeking information on the scale of the problem and the cost to the Treasury. He also asked about "forward contracts" whereby the Treasury accepts a set annual tax from people whose assets are offshore, beyond the Inland Revenue's reach.

No 10 said the government has "as good a record as any previous government in tackling tax avoidance. Every budget since 1997 has included measures to close tax loopholes. We will continue to work in this area".

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