As many as 10,000 people could be working in slave-like conditions in textile factories in Leicester.
Leicestershire MP Andrew Bridgen has told Sky News a "conspiracy of silence" has allowed factories in the city to continue to exploit workers over many years.
"You've got a systemic failure of all the protections in Leicester that would prevent this from happening," Mr Bridgen said.
"I've estimated it's around 10,000 individuals who are effectively in modern slavery providing garments for internet retailers."
The claim comes on the same day a report based on police records found that across Britain there are at least 100,000 slaves.
The study by the Centre for Social Justice think tank and the anti-slavery charity Justice and Care claims the issue is likely to intensify in the wake of the coronavirus pandemic.
Justice Secretary Robert Buckland told Sky News' Kay Burley @ Breakfast show that "a light is now being shone on an appalling litany of abuse" as he welcomed a National Crime Agency investigation in allegations about factories in Leicester.
"Modern day slavery is all around us, it's in every town and city in Britain and, indeed, in our rural areas as well," he added.
"It takes many forms.
"But this type of exploitation - people being paid well under the minimum wage, having to work in unacceptable conditions - that sort of abuse has to be stamped out, it has to be examined, we have to follow the evidence and prosecute wherever possible."
Leicester City Council estimates there are around 1,500 textile factories across the city.
Most are small businesses - workshops housed in crumbling buildings that are in desperate need of repair.
Smashed windows are patched up with cardboard. Fabric is draped so it's impossible to see inside.
For decades there have been claims some factories pay workers well below £8.72 per hour, the national minimum wage.
The government's Health and Safety Executive (HSE) is investigating allegations some factories forced people to work in unsafe conditions during lockdown.
"The internet retailers have flourished during the COVID crisis because their competition has been shut down. So we've seen a huge extra demand for the products," said Mr Bridgen.
Many of the factories lie within the Leicester East constituency of MP Claudia Webbe.
She says she has been contacted by anonymous workers who are too scared to speak out publicly because many are in the country illegally.
"Machinists are being paid £3 an hour, packers are being paid £2 an hour. That is what seems to be the standard," she said.
Outside one factory a worker who asked not to be named told Sky News she is paid between £5 and £6 an hour.
"Very little money," she said, in broken English.
Immigration officers patrol the streets outside the factories and a multi-agency investigation is under way.
Many feel it is long overdue.
When asked if claims of widespread exploitation in the city are an "open secret", deputy mayor Adam Clarke replied: "You call it an open secret. It's just open.
"There are doubtless workplaces in the city that are unsuitable.
"We've been aware of this for a very long time and have been working with enforcement agencies to try to ensure that there is effective regulation enforcement.
"The network of agencies that have responsibilities is just too complex.
"There are just too many organisations, HMRC [HM Revenue & Customs], the GLAA [Gangmasters and Labour Abuse Authority], the HSE and others have enforcement responsibilities. There needs to be one enforcement body and that needs to be set up as quickly as possible.
"This is a systemic issue that is borne out of poor regulation, poor legislation and exploitation at every level.
"You have to ask yourself who actually has the power to change this? And that buck stops with government."
A Home Office spokesperson said: "We take all allegations of modern slavery extremely seriously and are determined to ensure ruthless criminals who exploit vulnerable people face the full force of the law.
"The National Crime Agency and others are looking into the appalling allegations about sweatshops in Leicester and the home secretary has been clear that anyone profiting from slave labour will have nowhere to hide."
Immigration vans patrol the streets. The atmosphere is tense
Becky Johnson, Midlands correspondent
On East Park Road in Leicester among a row of shops, cafes, a bank and a police station stands the imposing Imperial Typewriter building.
At first glance it looks like a run-down relic of a bygone era.
But as you walk into the courtyard behind the building, it's like entering a land that time has forgotten.
Many of the windows have been smashed and patched up from the inside with cardboard. Fabric is draped across any windows that still have panes of glass. It's impossible to see in.
There's rubbish everywhere. The fact it's raining doesn't help.
Some people appear on a staircase, only to see me and run back inside.
There are several doors into the building, each with multiple names of clothing manufacturers above them.
I venture through one of the doorways and find myself on a rickety metal staircase.
I go up several floors before I find a door to knock on. When a man answers and I tell him I'm from Sky News, he doesn't want to talk to me.
Other doorways lead to a maze of corridors. It's not clear which doorway belongs to which business.
It's the same story at the other factory buildings.
People are on edge as soon as they see we have a TV camera. They start to film us on their phones.
"The workers are all frightened," a delivery driver told me.
When I try to ask workers what they're paid, most simply reply that they don't speak English.
A Home Office immigration van patrols the streets. A police officer in plain clothes and an inspector from the city council leave a factory. The atmosphere is tense.
A man stops me and tells me he has information for me, then darts a look over his shoulder, sees something and runs off.