Workers at the Lindsey oil refinery in Lincolnshire are insisting that one British worker be employed for every Italian or Portuguese contractor.

Amid mounting confusion in the row over foreign workers, union members rejected a deal under which an additional 40 skilled and 20 unskilled jobs at the plant would have been allocated to British workers.

The refinery has been the scene of illegal industrial action since last Wednesday by workers who are angry that Italian and Portuguese workers have been brought in by a subcontractor. They say the foreign workers are undercutting British workers, a claim disputed by Total.

This deal, proposed by negotiators last night, was thrown out at a meeting of 500 workers outside the Lindsey plant this morning. The workers claimed that the proportion of new jobs for UK workers – 21 per cent of the workforce – was not high enough.

A GMB spokesman suggested this morning that a second offer was made by Total last night, which would have led to 101 of the 198 construction engineering jobs being offered to British workers. However, this offer has not yet been made in writing, and has therefore not been put to a vote. Other union officials denied that such an offer had been made.

The Times understands that the dispute started last week when Total rejected a demand from the union that one British worker be employed for each Italian or Portuguese worker.

Derek Simpson, the joint general secretary of Unite, said that such an agreement would not deal with the wider problem of British workers being undercut.

Yesterday 500 workers at Shell's Stanlow Oil Refinery in Ellsesmere Port, Cheshire, came out on strike in solidarity, breaking union laws prohibiting secondary action. They returned to work this morning.

John Mann, the Labour MP for Bassetlaw, tabled a Commons early-day motion deploring the use of foreign workers at the Lindsey refinery, and congratulating unions for “exposing this exploitation and the absence of equal opportunities to apply for all jobs”.

This has caused anger among some Labour MPs, who said his motion risked inflaming xenophobia.

This morning his motion had disappeared from the Commons website.

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