MPs are calling for a study into the possibility of an ethical "Kitemark" for garments to help raise standards at overseas factories in the wake of the Rana Plaza factory collapse in Bangladesh.

In a report launched on Monday, the all-party parliamentary group for Bangladesh said there was a high chance of another tragic event like Rana Plaza, where more than 1,100 people died, or the Tazreen fire, which killed more than 100.

MPs also called for regulation of ethical audits, which monitor safety and conditions in factories for brands and retailers, and said there should be a legal requirement that any problems they discover should be revealed to workers' representatives.

The MPs' recommendations came as thousands of Bangladeshi garment workers took to the streets of Dhaka to demand higher wages, forcing the closure of about 100 factories.

Workers are unhappy with a minimum wage rise announced last week from 3,000 taka a month (£24) to 5,300 taka, which they say falls short of the amount needed to cover rising food and fuel costs.

Unrest is not uncommon in Bangladesh, the world's second largest clothing exporter, where low wages are accompanied by poor conditions for many, highlighted by a string of factory accidents. After years of foot dragging, three global agreements have emerged in an attempt to improve matters since the Rana Plaza tragedy in April. Several industry insiders said many of the MPs' recommendations were being implemented under those agreements.

The MPs' report, which comes after a lengthy investigation including a trip to Bangladesh by four MPs led by the group's chairwoman, Anne Main, concludes that poor planning and building controls have resulted in substandard construction, with 90% of buildings failing to meet any building codes.

"Consequently, there is high chance of a repeat of the tragic events of Rana Plaza and Tazreen Fashion's fire. These risks compromise the long-term investments of brands and limit their ability to improve working conditions," the report says.

MPs said the UK government was a major donor to Bangladesh but could do more to help. The group came out against the idea of sanctions but said the Bangladeshi government needed to act now or risk losing investment and favoured access to the EU market, which could hit exports by as much as 8%.

Peter McAllister, executive director of the UK-based Ethical Trading Initiative, (ETI) whose members include Marks & Spencer and Primark, said western governments needed to support Bangladesh in making changes. He said: "It is crucial that there is a focus on actions that are practical, will make a difference in the short term and that can be executed."

McAllister warned there were dangers in rushing towards an ethical Kitemark, an idea also discussed when the Department for International Development (Dfid) met retailers this summer to talk about how clothing could be produced more responsibly.

"Any call for transparency should also be applauded, but these calls need to be linked to purchasing practices and fair trading standards," he said.

The ETI did agree with MPs that there were flaws in the way brands and retailers checked up on their suppliers and greater transparency and co-ordination was needed in the way ethical audits worked.

Mark Robertson of Sedex Global, which collates audits from around the world for retailers, said it was "an interesting idea." But he added: "How would that work across different jurisdictions? Given the global market of supply chains any attempts at legal regulation could be challenging."