The former deputy prime minister Lord Prescott has written to the home secretary to complain about a security firm that used unpaid jobseekers to steward the Queen's diamond jubilee celebrations in London.

He said he was "deeply concerned" by the revelations, published in the Guardian on Tuesday, that up to 30 unpaid jobseekers on the government's work programme were asked to sleep under London Bridge before the river pageant on Sunday.

He is calling for Theresa May to investigate whether the company has broken the security industry's own employment standards and is urging the government to review the company's contract for the Olympics.

The firm, Close Protection UK (CPUK), has issued "sincere apologies" for what it called the "London Bridge incident", but insisted that it had not been exploiting individuals but providing work experience.

Up to 30 jobseekers and another 50 people on apprentice wages were taken to London by coach from Bristol, Bath and Plymouth on Saturday before the pageant on Sunday as part of the government's work programme.

Two jobseekers, who did not want to be identified in case they lost their benefits, later told the Guardian that they had to camp under London Bridge overnight, to change into security gear in public, had no access to toilets for 24 hours, and were taken to a swampy campsite outside London after working a 14-hour shift in the pouring rain on the banks of the Thames on Sunday.

In the letter, Prescott said the situation raised "very serious questions" about the "suitability of using private security contractors to do frontline policing instead of trained police officers" and that the company had shown a "blatant disregard for the care of its workers".

He wrote: "It is totally unacceptable that young unemployed people were bussed in to London from Bristol, Bath and Plymouth and forced to sleep out in the cold overnight before stewarding a major event with no payment.

"I am deeply concerned that a private security firm is not only providing policing on the cheap but failing to show a duty of care to its staff and threatening to withdraw an opportunity to work at the Olympics as a means to coerce them to work unpaid."

Prescott, who is running to be the elected police and crime commissioner for the Humberside police force area, ended the letter by calling for an investigation into the matter and calling for CPUK's contract for the Olympics to be urgently reviewed.

"I call on you to immediately investigate this matter and alert the Security Industry Authority to see if CPUK has breached its SIA approved contractor status.

"I believe that this could be a breach of 2.3.1(f) of the SIA approved contractor status terms and conditions of approval, which states a contractor can have approved status removed if it is 'found no longer to meet the fit and proper person criteria applied by the SIA'."

On Tuesday, Molly Prince, the managing director of CPUK, reconfirmed that a number of staff were unpaid but apologised for the fact that a number of their stewards had to sleep under London Bridge.

In a statement Prince said: "The London Bridge incident should never have happened but was to some extent outside our control, the coach drivers insisted on leaving. For this we sincerely apologise, on investigation this morning the majority of the team were happy, fed and looked after as best possible under the circumstances.

"We are not in the business of exploiting anyone," the statement added.

Speaking about those who were unpaid, Prince said: "The only ones that won't be paid are because they don't want to be paid. They want to do this voluntarily, [to] get the work experience." This was because they would no longer be able to claim jobseeker benefits if they accepted a wage for the work, she said.

Prince added that jobs could be lost if the firm's security contracts were jeopardised but she would also personally speak to everyone individually to gain feedback about the event.