The government has shelved “senseless and disastrous” plans that a solicitor feared could have prevented hundreds of Teesside industrial disease victims and their families from receiving justice.

Companies House said it was considering deleting records of firms that stopped trading just six years ago, instead of the present 20-year limit.

That would have left claimants who became ill many years after being exposed to deadly asbestos unable to trace former employers and therefore claim compensation. Since last June all such searches have been free of charge to members of the public.

However, in a written answer to a parliamentary question from SNP MP Martin Docherty-Hughes, the government said the proposals would not now go ahead.

“The government has no current plans to bring forward proposals to reduce the period of time that Companies House retains records of dissolved companies,” said minister for small business, consumers and corporate responsibility Margot James.

“Nevertheless, we will continue to keep the retention period under review, during which time the registrar of companies will ensure there is no destruction of records. Additionally, any future proposal to change the retention period would be subject to public consultation.”

The move had come under fierce criticism from the Asbestos Victims Support Group, which was ready to take legal action if it had gone ahead, while other critics said it would hinder the battle against corporate corruption.

Anthony McCarthy, an asbestos specialist in the personal injury at Macks Solicitors who criticised the idea, welcomed the U-turn.

“It’s a well-known fact that illnesses such as mesothelioma can take up to 50 years or more to become apparent,” he said.

“For justice to be served it’s essential that victims and their representatives are able to trace the firms people have worked for and find out whether they were insured.

“Simply destroying thousands of records, seemingly in the name of data protection, wouldn’t have helped anyone but would have simply led to many innocent workers never receiving the compensation they deserve.

“I’m glad the government has seen sense and listened to those of us who appealed to them to think twice and step back from what would have been a senseless and disastrous move.”