Theresa May discussed the Paradise Papers with the leaders of 10 British overseas territories at their annual gathering in Downing Street on Tuesday, with the prime minister urging further action to combat tax avoidance.

A cross-party group of 12 MPs wrote to the prime minister last week requesting she set a deadline for tax haven jurisdictions under British control to publish registers of the real owners of shell companies.

May raised the issue of public registers at the meeting, a government source confirmed, and said work on tax avoidance could help enhance reputations internationally. However, the prime minister has so far refused to endorse the measure, which was championed by her predecessor, David Cameron.

The annual joint ministerial council was attended by leaders from Bermuda and the British Virgin Islands, whose territories have been revealed in the Paradise Papers and elsewhere as major conduits for illicit offshore activity.

Half of the 240,000 shell companies represented by the law firm Mossack Fonseca, whose activities were exposed in last year’s Panama Papers and whose founders have since been arrested on money-laundering charges, were incorporated in the BVI.

In a statement Downing Street said the prime minister had “raised the issue of financial services, noting the increased focus on taxation and transparency that have come to the fore since the recently leaked Paradise Papers”, and asked for leadership “to show what more can be done to make further progress on the issue”.

But MPs led by Labour’s Margaret Hodge want the government to step in and legislate for greater transparency if overseas territories fail to make changes voluntarily. In a letter sent to the commonwealth minister, Lord Ahmad, before Tuesday’s meeting, she said: “It is our tax havens that are completely central to much of the tax avoidance, evasion and financial crime uncovered … Public registers in our overseas territories are the only way by which we can ensure that we know who owns what where.”

A representative for Bermuda declined to comment on the meeting, saying a joint statement would be issued by the overseas territories on Wednesday.