G4S and Serco should be barred from bidding for government business until a major fraud investigation into their practices has been completed, prison reform campaigners have said.

Both multinationals are being investigated by the Serious Fraud Office (SFO) and have agreed to repay a total of more than £180 million after it emerged they had overcharged the taxpayer for electronic tagging of criminals.

Charity The Howard League for Penal Reform will today hand a dossier outlining actions they claim amount to failures by both firms to the Metropolitan Police in a protest move against ministers' decision to allow G4S and Serco to resume bidding for contracts.

Another report, considering actions by other private firms such as Sodexo and GEOAmey, will be sent to MPs on the Public Accounts Committee, which heard evidence about the tagging scandal last November.

Frances Crook, chief executive of the Howard League for Penal Reform, said: "We are asking the Metropolitan Police and City of London Police to use their resources and expertise to help the Serious Fraud Office with its complex investigation into possible widespread criminality by companies profiting from public money when they deliver justice services.

"The dossier compiled by the Howard League is a litany of failure by private companies.

"The delivery of justice is one of the most precious public services and we must, as a nation, adhere to the highest standards of probity.

"The possibility of systematic fraud of the public purse on a massive scale by profiting companies diminishes justice."

Cases outlined by the charity in its dossier include claims that a terminally-ill prisoner was kept waiting in handcuffs for 40 minutes in the street, in full view of the public, while G4S staff went to a bakery for lunch and allegations that a woman in a Sodexo prison was forced to clean her cell after miscarrying.

G4S, based in Crawley, and Serco were both found to have billed the taxpayer for tagging dead criminals, offenders who had been recalled to prison and others who had fled overseas.

Both firms were initially suspended from bidding on future public sector contracts.

But the Cabinet Office has accepted turnaround plans put forward by both companies and they are now able to bid for future Government contracts.

However, the decision has no impact on an investigation opened by the Serious Fraud Office (SFO) into G4S and Serco's activities.