The Federation of Small Businesses (FSB) is gunning for no-win, no-fee firms, which it blames for the liability crisis.

It wants their advertising controlled and lawyers bringing unsuccessful claims forced to pay the insurers' legal costs.

The moves come as the BBC's consumer programme Watchdog is expected to air an investigation into fraudulent no-win, no-fee cases.

FSB parliamentary affairs head Stephen Alambritis said the federation would lobby the Law Society to introduce a code of practice for advertising by solicitors.

"When the government allowed legal advertising to be deregulated, it can't have foreseen the type and scale of advertising that no-win, no-fee lawyers now use, particularly on television," he said.

The FSB, which represents 170,000 firms, has also urged the Lord Chancellor's Department to investigate no-win, no-fee lawyers' actions.

Risk management association Alarm has fully supported the FSB's campaign, saying the firms had contributed enormously to claims against councils.

Alambritis said the FSB originally contacted the Advertising Standards Authority (ASA), because the advertisements played a large part in the current problems businesses face obtaining liability cover.

Alambritis said the ASA was unable to take action against the advertisements.

"Some of the adverts are frankly distasteful and a code of practice is needed urgently," he said. "While it recognises a code of practice will not be the whole solution, the FSB is arguing it would combat advertisements that are obviously misleading and allow the ASA to act."

Alambritis said the FSB also wanted Lord Chancellor Derry Irvine to intervene.

"One of the proposals that should be considered is the payment of the insurer's costs by the prosecuting solicitor in the event of an unsuccessful prosecution,' he said. "This would reduce the stream of such cases and lower insurers' exposure."

Alarm chairman David Fleetwood, who is head of procurement at Sunderland City Council, said: "Without a shadow of a doubt, claims numbers have gone up year after year ever since they were introduced," he said.

A Law Society spokeswoman said the society held a forum in April on the personal injury market in a bid to raise standards.

She said research showed four out of five people did not believe the levels of compensation promised in no win-no fee advertising were true.