Prescott urges inquiry into Jubilee work experience claims
Ministers are being urged to look into reports that unemployed people hired as unpaid stewards for the Diamond Jubilee ended up having to sleep outside.
Volunteers from the government's work programme spent part of the night under London Bridge before Sunday's Thames pageant, the Guardian said.
Labour's Lord Prescott said the home secretary should hold an inquiry.
Close Protection UK has apologised and blamed a "misunderstanding" that led to volunteers being dropped off too early.
The Guardian reported that volunteers bussed in from Bristol, Plymouth and Bath had to spend part of the night under London Bridge, one telling the newspaper that conditions were "freezing" and another saying it was impossible to pitch a tent due to the concrete surface.
They also told the newspaper that they had to change into their clothing - which included a plastic poncho for protection against the rain and high-visibility jacket - in public and had no access to toilets during the 14-hour shift.
Close Protection UK said staff should not have been dropped off at 0300 BST with nowhere to stay, but confusion had arisen because the coach driver was two hours ahead of schedule.
In a statement, managing director Molly Prince offered her "sincere apologies", but accused the newspaper of trying "to sensationalise an unfortunate logistics planning problem".
"Nobody was sent to camp under a bridge overnight as the report suggests," she said.
"The volunteer group arrived early and were de-bussed by the coach company who had given a 5am/5.15am [estimated time of arrival] and unfortunately, my member of staff did not deal with this in the way that I would have hoped."
She added: "There was no intention to exploit anyone or indeed supply cheap labour."
But Lord Prescott has written to Home Secretary Theresa May calling on her to urgently investigate what happened.
"If the allegations are true, it is totally unacceptable that young unemployed people were bussed in to London from Bristol, Bath and Plymouth and forced to sleep out in the cold overnight before stewarding a major event with no payment," he wrote.
"I am deeply concerned that a private security firm is not only providing policing on the cheap but failing to show a duty of care to its staff and threatening to withdraw an opportunity to work at the Olympics as a means to coerce them to work unpaid."
The firm said it took on 80 people to act as stewards over the Jubilee through the government's apprentice and work programme schemes - which aim to help the long-term jobless back into work.
Of these, 50 people under the age of 25 were paid the government's standard rate for apprentices of £2.60 per hour and the other 30 either accepted the same rate or refused payment because it would adversely affect their benefits.
Work experience is a compulsory part of the NVQ2 qualification in stewarding - which is essential for work at major events such as the Olympics.
Close Protection said the unpaid roles were a trial for paid positions at the 2012 Games, for which it also has a contract to provide stewarding.
The company, which is based in Wigan, said it paid for meals for all the Jubilee volunteers, accommodation on the night after the event as well as supplying their clothing, equipment and licences to undertake the work.
But Ms Prince said steps had been taken "to ensure that better logistics planning will be in place for the Olympics".
The charity Tomorrow's People, which set up some of the placements at Close Protection UK, said it did not approve of unpaid work but in this case believed that it was valid work experience.
However, it is seeking further clarification from the stewarding company.
The Department for Work and Pensions said the work programme used organisations such as charities to help get the long-term unemployed back into work and while on such schemes individuals continued to receive their Jobseeker's Allowance.