The Liberal Democrats have called for the Office of Fair Trading to be given more powers.

The call comes amid fresh reports that the watchdog is powerless to act against "rip-off Britain".

The party has urged the chancellor to step in following a report by the Office of Fair Trading which found that Mastercard fees are too high.

An investigation found retailers were paying an "unjustifiably high fee" to card-issuing banks for Mastercard transactions and those costs being passed on to consumers; a practice that infringes the Competition Act of 1998.

Vince Cable, the Liberal Democrat trade spokesman, said there were now too many cases of "rip-off Britain" and the OFT had to act to stop the abuse.

"The chancellor promised to give the OFT proper powers to regulate payment systems in his November 2002 pre-budget report - but we're still waiting for the legislation," he said.