The government has launched an inquiry after it was forced to admit that jobcentres have been setting targets and league tables to sanction benefit claimants despite assurances to parliament this week that no such targets were being set.

A leaked email shows staff being warned by managers that they will be disciplined unless they increase the number of claimants referred to a tougher benefit regime.

Ruth King, a jobcentre adviser manager, discloses in the email that she has received "the stricter benefit regime" figures for her area, adding: "As you can see Walthamstow are 95th in the league table out of only 109" – the number of jobcentres in London and the home counties. The employment minister, Mark Hoban, had assured MPs on Tuesday: "There are no league tables in place. We do not set targets for sanctions. I have made that point in previous discussions."

The league table could only have been drawn up through information provided by senior managers in the Department for Work and Pensions.

Hoban had told MPs that decisions on sanctioning claimants "need to be based on whether people have breached the agreements they have set out with the jobcentre, and there are no targets in place".

Faced with the email, the DWP said: "We are urgently investigating what happened in this case. If a manager has set a local target for applying sanctions this is against DWP policy and we will be taking steps to ensure these targets are removed immediately."

King says in her email: "Our district manager is not pleased … because senior managers are under pressure to improve our office output and move up the league he has to apply some pressure downwards." She continues: "Guys, we really need to up the game here. The 5% target is one thing – the fact that we are seeing over 300 people a week and only submitting six of them for possible doubts is simply not quite credible."

The email reveals that along with other area team managers King had until 15 February to show an improvement, adding that if she does not do so she will be subject to a performance improvement plan, the first stage of disciplinary action.

She says if she is threatened with disciplinary action to improve performance, she will have to threaten her own staff in the same way. She writes: "Obviously if I am on a PIP [performance improvement plan] to improve my team's Stricter Benefit Regime referral rate I will not have a choice but to consider implementing PIPs for those individuals who are clearly not delivering SBR within the team."

She also discloses that the jobcentre customers manager is looking for about 25 referrals a week. "We made six last week and so far this week have made four. There is a shortfall here."

The shadow work and pensions secretary, Liam Byrne, is due to raise the matter in parliament on Friday. He said: "This explosive letter lays bare the climate of fear in jobcentres as league tables and threats of disciplinary action are used to perpetrate a culture of sanctioning innocent people to hit targets. That is just plain wrong and must be stopped now. Either ministers have no grip on their department or they misled parliament. Either way they must now face the consequences."

The Labour MP for Walthamstow, Stella Creasy, said: "We have to get to the bottom of this. It is quite horrible that jobcentre staff feel they have to set people up to fail."

The DWP maintained that this was an isolated case. Hoban said: "I'm clear there should be no chasing of targets because I believe we should be making the right and fair decisions."

In the email King sets out ways jobcentre staff can catch out claimants, saying: "You should consider every doubt – if you are unsure then please conference with me." Her advice includes: "Do not accept the same job search every week, do not accept 'I dropped off CV to shops like Asda or Sainsbury's', listen for telltale phrases 'I pick up the kids', 'I look after my neighbours children/my grandchildren' or just 'I am busy' – all of which suggest that the customer may not be fully available for work, even cases where a parent shares custody can be considered."

She says someone can be deemed not to be actively seeking employment, and therefore subject to sanction "if someone is going away from home, but is not willing to return to take up employment, not willing to leave details of how they can be contacted should a job become available or not looking for work whilst away".