Fury as firms asked: Are your staff LGBTs? (...that's Lesbian, Gay, Bisexual or Transperson people, if you're wondering)

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The so-called "supplier diversity development questionnaire" is sent to all bidders for contracts with the London Development Agency.

It asks about the racial origin of a firm's employees, then about their sexual orientation.

The questions include: "Is your organisation mostly owned or led by LGBT (lesbian, gay, bisexual and transperson) people?" and "What is the percentage of LGBT staff in your workforce?"

The LDA receives £400million of Government funding each year and its board is appointed by London Mayor Ken Livingstone.

It says it needs the data to monitor progress towards its goal of "maximising the diversity of its supplier base".

But the director of a company bidding for a contract to refurbish a London fire station said: "I was dumbstruck when I saw the questionnaire.

"I looked at my dignified and proper middle-aged secretary and thought, I'm not going to ask her if she is a lesbian, let alone a transperson. The questions are intimate, intrusive and irrelevant."

The businessman, who asked to remain anonymous, added: "It says the information will not be used to determine who wins the contract.

"But what if one firm isn't diverse and another has three transpersons on the payroll? It will be easy for the LDA to tick its equality box by using that firm.

"I employ builders, plumbers and engineers because they are good at their jobs – not because of their sexual preferences."

Simon Briault of the Federation of Small Businesses said: "Tendering for work in the public sector is complicated enough without these strange and unnecessary questions."

And Philip McCabe of the Forum of Private Business said: "Managers should be making sure employees can do their jobs properly, not enquiring into their sexual orientation."

The LDA has faced fierce criticism amid allegations that it gave hundreds of thousands of pounds to projects linked to Mr Livingstone's race and equality adviser Lee Jasper and his associates.

An LDA spokesman said: "The LGBT community experiences discrimination and we seek this information as there are concerns about fair and equal access to business opportunities."