Officials fear Leeds magistrates court could have allowed suspected criminals to walk free by failing to issue warrants for their arrest when they did not show up in court.

As a result, it is alleged, many of the cases were simply written off.

Today, Straw announced an investigation by the chief inspector of courts administration in consultation with the Crown Prosecution Service.

In a written statement, he said: "The investigations will verify the number of cases involved, the breakdown of offences and the position regarding the police national computer.

"We have started investigating the national process and practice for withdrawing warrants, involving courts, the police and the Crown Prosecution Service.

"This has identified differing practices across magistrates courts which will require further local investigation and may require us to clarify the procedures. The issue over the withdrawal of warrants, which was reported to ministers last week, is of particular concern."

Opposition MPs fear similar failures involving arrest warrants may mean that other courts across the UK have also allowed offenders to go free.

Greg Mulholland, the Liberal Democrat MP for Leeds, said: "This is an appalling example of systematic, institutional incompetence.

"An urgent and thorough investigation is needed to unearth how long this has been known about, who knew, and whether we have been given a true and complete picture of this fiasco."

The news came as yet another blow to an increasingly beleaguered government still reeling from a series of continuing scandals.

This week, further revelations concerning party donations have rocked Gordon Brown's self-styled "open and trustworthy" administration.

The alleged court blunders came to light following a national review of "the effectiveness of processes" for the 2.2 million cases dealt with in UK magistrate courts each year.

Researchers then identified "further problems" with arrest warrants agreed by Leeds magistrates dating back to 2003.

Leeds magistrates court today refused to comment on the allegations, referring all enquiries to the Ministry of Justice.

A spokeswoman from the Ministry of Justice said an inquiry into the affair "was ongoing".