A concentration of underpaid workers has been uncovered in western Sydney, with almost two- thirds of businesses audited found to be seriously short-changing workers or failing to keep proper pay records.

The Fair Work Ombudsman investigation found that 64 per cent of almost 200 businesses audited were breaching workplace laws in suburbs including Cabramatta, Guildford, Mount Druitt, Fairfield and Merrylands.

Fair Work Ombudsman Natalie James said businesses that were underpaying workers and not issuing them with correct pay records were on notice that future breaches could result in serious enforcement action.

She said her agency would not hesitate to take action where deliberate or repeated breaches of the law were identified.