The Grenfell Tower public inquiry has been delayed after corporate witnesses threatened not to give evidence unless assured anything they say will not be used in criminal prosecutions against them.

Hearings have been cancelled for the rest of the week so the chairman of the inquiry, Sir Martin Moore-Bick, can consider a demand for the undertaking from lawyers for the architects, builders and the client on the disastrous refurbishment of the west London tower block.

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Survivors and the bereaved have reacted with anger to the request for protection against self-incrimination and said it “bears hallmarks of sabotage”.

But Moore-Bick is widely expected to ask the attorney general to prevent “the use of evidence given by witnesses … against them in any future criminal proceedings” in order to avoid the inquiry being entirely derailed. Without the agreement, witnesses called during the examination of how Grenfell Tower came to be refurbished in such a dangerous way could simply refuse to answer questions.

The decision to cancel this week’s hearings means cross-examination of Andrzej Kuszell, Bruce Sounes and Neil Crawford at the architects Studio E will be delayed. Lawyers for the corporates seeking the protection said it was necessary because detectives are investigating possible crimes ranging from breaches of the Health and Safety Act to manslaughter. However, it is unclear how detectives could be entirely restricted from following up leads generated from evidence to the inquiry.

A spokesperson for the inquiry said: “A further announcement regarding the timetable will be made once the panel has issued its ruling on the application.”

The demand for protection was made last week by lawyers acting on behalf of Studio E, the cladding contractor Harley Facades, current and former employees of the main contractor Rydon, and officials at the Kensington and Chelsea Tenant Management Organisation, which ran the tower block where 72 people died in a catastrophic fire in June 2017.

Michael Mansfield QC, representing one of the groups of bereaved and survivors, told the inquiry on Monday the application was “totally without merit” and urged Moore-Bick not to endorse it. He also urged the corporates to reconsider “whether they really want to put the families through more anguish, more agony”.

Stephanie Barwise QC, representing the other group, said they were neutral on whether Moore-Bick should request it, because it had been impossible to gather the views of all of their scores of clients in such a short space of time. But she said there was “utter outrage” at the request among her clients, coming as it did a few days into the start of the second phase of the inquiry.

“Our clients find themselves placed in a wholly impossible position because they cannot know the nature of the evidence which will emerge and it is not possible to know how these undertakings, if given, may affect subsequent prosecutions,” she said.