Letting agents will face fines if they fail to publish full details of fees charged to tenants, Business Minister Jenny Willott announced tonight.
Expanding on comments made earlier by Deputy Prime Minister Nick Clegg, Ms Willott pledged to amend the Consumer Rights Bill to tighten up the rules.
Labour launched a bid to ban fees altogether by tabling its own amendment to the Bill.
Speaking during a report stage debate on the Bill, Ms Willott said: "Today, in a move which ensures a fair deal for landlords and tenants I am pleased to announce we will be amending this Bill to require letting agents to publish full details of the fees they charge.
"Currently, the Advertising Standards Authority only requires letting agents to list charges to the tenant upfront in their advertisements. Those letting agents found to have imposed hidden charges face little more than being named and shamed on the agency's website.
"We want to go further than this to require all letting agents to publish a full tariff of their fees both on their websites and prominently in their offices. Anyone who does not comply with these rules will face a fine which is a much stricter penalty than currently exists."
Responding to Labour questions in the Commons earlier in the day, Mr Clegg said: "We share all your concern about those charges, we just want to make sure that the solution doesn't make the situation worse because when rents go up, they tend to stay up."
Ms Willott said transparency would mean agents would have to justify their fees properly for the first time.
But shadow business minister Stella Creasy urged the Government to go further, forcing Labour's plans to a vote of MPs.
Concluding the debate, she said: "The minister must realise it is not a small minority of letting agents charging fees and good landlords don't want to see themselves losing tenants because they can't afford these fees.
"You have to make a decision in this House on whether you are on the side of the consumer or on the side of business. We are very firmly here thinking we need to be on the side of the consumer on this particular instance in changing the way the rental market works.
"Rental fees are anti-competitive, there is a conflict there between who acts for the landlord, who acts for the agent, we need to change that."
Earlier, Tory MP Andrew Percy (Brigg and Goole) slammed Labour's proposals on the rental market as "student union" politics.
He said: "What we have got here is a particular campaign going on, we have got student union politics at the moment where the Opposition pick an issue and they throw it out there in the hope it kind of carries some traction.
"They don't think it through, there is nothing more than that. This time it is letting agent fees. They haven't gone out and spoken with... either letting agents or indeed with many of the tenants who have to pay these fees.
"I would like a sensible debate on this but we don't get a sensible debate on it."
Labour's amendment was defeated 281 to 228, majority 53.