The company at the centre of a police investigation into an alleged abuse of government back-to-work contracts compelled jobseekers to work unpaid in its own offices for at least a month at a time, the Guardian can reveal.

In response to a freedom of information request about the company last year, the Department of Work and Pensions (DWP) revealed that A4e sent jobseekers it was meant to be helping into employment to work in at least two of its own offices in an apparent conflict of interest.

The placements, part of Labour's Flexible New Deal scheme, were mandatory and are understood to have lasted for four weeks. Those on benefits were, in effect, forced to work for free for the company or have their benefits stripped.

The DWP's list of placements from just one of A4e's offices in Holloway, north London, shows that it sent the unemployed to work at two of its other London offices in Camden and Woolwich. The document also contains a third reference to work in an A4e office.

The list also reveals that from the 12 months to late June 2011 the company sent people to work unpaid in Asda, Sainsbury's, Oxfam bookstores and a host of other charities and small businesses.

Oxfam and Sainsbury's have since pulled out of unpaid work experience programmes linked to the receipt of benefits. A dozen other major charities and high street chains have also left the programme following protests.

Speaking in the Commons on Wednesday, David Cameron praised work experience for young people. "I think we should encourage companies and encourage young people to expand work experience because it gives people a chance of seeing work and all that involves and gives them a better chance to get a job," he said during prime minister's question time.

The prime minister will go further in defence of the government's work experience schemes on Thursday. "We see this in the debate on education, put a young person into college for a month's learning, unpaid – and it's hailed as a good thing," he will say.

"Put a young person into a supermarket for a month's learning, unpaid – and it's slammed as slave labour.

"Put a child into a great school run by a local authority – cause for celebration.

"Put them into a great school backed by a bank – and that is a cause for suspicion."

He urged a "thorough" inquiry on Wednesday into A4e after four of the company's former staff were arrested as part of an ongoing police inquiry at its offices in Slough.

A former government official who helped devise Labour's unemployment programmes said he was "very surprised" that A4e had placed the unemployed to work for free in its own company.

There is no suggestion that A4e would have received any direct financial reward for placing people in unpaid work experience but the official explained that mandatory placements were partly devised to stop those private companies running back-to-work schemes from "parking" difficult or problematic jobseekers.

Apart from being able to gain from unpaid labour, the senior former official, who did not want to be named, said sending jobseekers to work in its offices would help A4e cut down on its overheads as it would not have to spend time on organising placements in outside businesses.

The company – owned by families tsar, the millionaire Emma Harrison – has refused to comment on the allegations or explain what work they were made to do and whether it included tasks such as data entry, cleaning or was job shadowing.

Harrison has come under pressure to step down from her post since she was appointed by Cameron in December 2010 but on Wednesday a spokesperson for her said she was "staying put".

A4e corroborated the veracity of the document and has previously confirmed that companies listed in the freedom of information release have been used by A4e to place jobseekers.

The revelation raises the question of where private companies running back-to-work schemes such as Mandatory Work Activity (MWA) and the Work Programme are allowed to place unemployed people.

In recent days, ministers and the DWP have insisted that while the "voluntary" work experience scheme operates in high street chains, mandatory placements are always for community benefit.

Writing in the Sunday Telegraph, employment minister Chris Grayling said: "Where we use mandation in our welfare policies, it will be to do useful work on community projects. We will never mandate anyone to work for a big company. They wouldn't take them if we did."

An official tweet from the DWP also backed the claim saying: "The DWP only mandates people for community work #workfare".

However, the private company Seetec, which won two contracts to run the MWA scheme in London and the East of England told the Guardian that "community benefit" also includes private companies.

In a statement Seetec said: "There are occasions where people taking part in MWA would carry out a work placement with a local employer who may be a private company, but this would be a placement that does deliver community benefit."

The DWP has now clarified that private companies can also be included in the definition of "community benefit". Official figures show that 24,000 mostly young jobseekers have been made to do MWA but since this entire scheme is administered by private companies, information on where worked has not been made public. In response to questions about mandatory placements from the Guardian, a spokesperson for Ingeus Deloitte, which administers MWA in the east Midlands and the north-east, said: "We have not sought the permission of MWA placement providers to publish their names so will not be able to issue you with a list at this time. However, I can confirm that our clients are placed with wide range of community-based organisations and charities which benefit the local community, in accordance with the provider guidance issued by DWP."

Both Seetec and Ingeus said that they did not place jobseekers on MWA placements within their own company.

Official provider guidance for the MWA says "community" benefit can be defined as profit for the person using the unpaid jobseeker in their organisation.

Under section 48 of the 2011 official guidance, the third definition of community benefit is described as "working towards the profit of the host organisation, providing that the majority of the role is dedicated towards delivery of benefit to the community".

A Labour MP has contacted the Guardian to say they were concerned that the MWA programme had not been scrutinised by the Commons and had passed into law with the "tick of a minister's pen" last year.

A spokesperson for the DWP said: "As well as offering jobseekers the chance to develop work-related disciplines and behaviours, DWP specifies that all placements under the Mandatory Work Activity scheme must be of benefit to the local community. This could be in a wide range of roles, including renovating and recycling old furniture, working in a local sports club or supporting charitable organisations. The department also specifies that placements must be additional to any existing or expected vacancies."