TimePlan, the teacher supply agency at the centre of the Amy Gehring case, was in penitent mood this week.

It has acknowledged it made an “appalling mistake” in allowing Ms Gehring to carry on working in schools after police had warned that she posed a risk to children.

But the agency was not penitent enough for education ministers, furious at the suggestion from its chairman Ian Penman that the Department for Education and Skills had known about the allegations against Ms Gehring long before it took action. Estelle Morris, the Education Secretary, told the Radio 4 Today programme that she had “never heard anything more disgraceful”.

A DFES spokeman also rejected as “utter rubbish” a claim by TimePlan that it had found proof of a telephone call from Chris King, its director of education, notifying it of the allegations as early as October 10, 2000.

Consultants, hired by the agency to investigate the affair, have found nothing wrong with its procedures. But Surrey director Rob Stonier did not follow them.

Mr Stonier received a letter from Surrey police’s child protection unit, after Ms Gehring was dismissed from her first post. It said she posed a risk to children and should not be employed as a teacher. But he failed to act on the letter and gave her the posting which led to the trial.

The agency has written to the DFES suggesting that, to guard against such slip-ups in future, all involved parties - not just the employer - should notify the department of any allegations against teachers, to be immediately filed separately from List 99.

The department knew of the allegations against Ms Gehring for nearly two months before it contacted TimePlan for details, but that was thanks to the police, not the agency.

Surrey County Council also knew of the concerns about Ms Gehring but simply issued telephone warnings to some local schools.

Ms Morris is awaiting the outcome of the DTI inquiry before deciding on any further action.

Further controls will come from plans to require supply teachers to register with the General Teaching Council for England and from a kite-marking system for agencies that will be introduced in the summer.

But teachers’ leaders were this week demanding further action to regulate the pound;600 million industry on which schools increasingly depend. John Dunford, general secretary of the Secondary Heads Association, said: “The Government should put in place a licensing system, with a code of practice and clear sanctions.”

Chris King, a TimePlan founder, offered his resignation as director of education. But he remains a shareholder, and will stay on as an unpaid director, according to managing director Tish Seabourne.

She said: “Chris has done nothing wrong, but has done the honorable thing and resigned anyway.

“We have recruited 35,000 teachers in the last 13 years, and placed them in schools without incident. This is the first time anything serious has gone wrong.”