The Minister for Sport has called for an inquiry into whether the dominance of foreign footballers at clubs is behind the poor performance of the England team.

In an interview with The Times, Gerry Sutcliffe said that England's elite football clubs had not got the balance right, with too few homegrown players competing at the highest level.

He proposed that an independent inquiry be set up to consider ensuring that English players are better represented in the Premier League, but said that football bodies must take the lead.

“I understand the complexities of the issues around freedom of movement and competition issues, but it just doesn't feel we have the balance right," Mr Sutcliffe said.

“And we may need to have an independent look at what needs to happen. But, you don't want to disturb the balances that are there in terms of the success of the sport. He added: “We have the best league in the world and it's great that we have got the talent. But obviously we need to see how that impacts on and affects the national team.”

The Government is believed to favour a better system for training, developing and coaching young English footballers, rather than quotas on the players each club could play.

But there is no agreement within the game on the issue, with the Premier League and elite clubs saying that such a system should be based around club structures, but the Football Association favouring a focus on schools and FA coaching. Internal debate on an elite football centre of excellence for young players, as in France, has rumbled on without resolution.

The minister's intervention comes as England's footballers face a battle to avoid failing to qualify for next summer's European championships, with their fate dependent in part on other results. Scotland have also struggled to qualify, and must beat Italy on Saturday to do so.

Mr Sutcliffe has already discussed the issue with fellow European sports ministers. Uefa, European football's governing body, has increased the minimum number of homegrown players for squads in European competitions from four to eight.

It is the minister's second high-profile incursion into football, having attacked as “obscene” the £130,000-a-week wages of John Terry, the Chelsea and England captain. He stood by his comments, but said he was discussing football's financial viability, not attacking individuals, and praised the community work done by footballers.

But the minister did have a warning for Britain's Olympic athletes, saying that he wanted them to increase their tally of medals at the Beijing Games next summer to justify the Government's investment in elite sport.

British athletes won 30 medals at Athens in 2004, finishing 10th in the medals table. In the 2012 games in London, the Government's target is for Britain to finish fourth overall, and to come first in the paralympics. He is looking to sports such as judo and boxing to bring more medals, as well as sports where Britain already does well such as rowing, sailing and eventing.

“Given that we are investing over £200 million of public money to win medals in Beijing, I want to see an improvement on Athens,” Mr Sutcliffe said. “But I also [want to see] a greater number of people in finals, a greater awareness of ambition.”

Athletes in training for Beijing are benefiting from £114 million from the Treasury and £102 million from the national lottery. Preparations for 2012 have been allocated £600 million.

The minister added: "We are a nation of people that like to watch sport, really, as opposed to being people that would be actively involved in sport. One of my tasks is to make sure we break through that, and one of the ways of doing that is through the role models of elite and professional sport.”

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