A Labour MP's plans to extend employee share ownership and give workers a greater say at board level have received cross-party support.

Mark Lazarowicz's private member's bill, which is aimed at giving employees who hold shares in their firms a greater role in decision-making, gained an unopposed second reading on Friday.

Paymaster general, Dawn Primarolo, signalled that there may also be government support for his legislation if changes were made during its passage through parliament. "I believe we would be prepared to support an amended bill," she said.

Primarolo said the bill's principles were at the heart of government productivity policies but warned it was at odds with some aspects of the government's share investment plans.

"Employees should not be awarded shares inferior to those of other shareholders I have to conclude that in some respects the bill as it currently stands would work against the purpose of the current share incentive plan. Nevertheless I believe we would be prepared to support an amended bill," she said.

The Employee Share Schemes Bill follows a concerted attempt by the government to extend share ownership.

Lazarowicz wants to establish new collective trusts share schemes through which employees can contribute through deductions drawn directly from their salaries.

He also wants to extend "employee democracy provisions" in order to give workers with shares a greater say in the decision making process.

The MP believes that current legislation results in many employees who own shares in their firms having little influence. He argues that workers should be allowed to appoint elected trustees to company boards.

"The more that employees are given a role in the running of their company, the better for productivity and the better for the country as a whole," he told the Commons.

For the Conservatives David Lidington gave near-unanimous support for the legislation as a means of exploring the merits of employee share ownership schemes.

"It is good for employees to have a material stake in the success of their employer. Companies themselves benefit when they are able to unlock the enthusiasm, creativity and ideas of their own workforce," he said.

"I cannot stand here and promise to adopt this bill lock, stock and barrel as official Conservative policy but we take seriously the points it makes. We will not oppose this bill getting its second reading. I hope it will proceed to further stages so it can receive the detailed scrutiny it deserves."

Edward Davey, for Liberal Democrats, called it a "radical step forward'' offering real incentives and better communication."This legislation is not about giving a quick buck or a quick profit to employees. The objective is to make sure the interests and visions of employees and employers come together for the future benefit of the company and economy," he said.

The chancellor, Gordon Brown, has delivered a series of tax breaks aimed at encouraging employers to give workers a stake in their firms.

Evidence shows that firms which offer employees generous share ownership schemes have greater staff retention rates and higher productivity levels.

The legislation is backed by the TUC, the Industrial Society and the Co-operative movement.

However, critics have suggested that the Railtrack debacle, in which many employees have seen their investments virtually disappear, have called into question employee equity schemes.

In response to the debate Lazarowicz said: "I am delighted at my success in achieving a second reading of this Bill. I hope that it will pass into law. It will give an opportunity to workers in Scotland as in the rest of the UK to enjoy the benefits of wider employee share ownership and employee control of their businesses. The government is keen to boost productivity and democracy in UK firms, and this bill will represent a significant step towards these objectives."