Britain is preparing a law to punish bribery abroad by companies or people based in the UK as part of proposals to modernise its laws and bring them into line with international practice.

A draft Bribery Bill put forward by Justice Minister Jack Straw today would make it a criminal offence to offer or accept a bribe anywhere in the world, including attempts to bribe foreign public officials.

The maximum penalty for such a crime would rise from seven years to 10 years, with an unlimited fine, according to the bill. The proposals, the product of more than a decade of attempts at reform of the laws, would also include a new corporate offence of negligence in preventing such a bribe.

The bill, which must still go before a parliamentary committee for consideration, is needed to bring transparency to international business where advances in technology and communication make it easier for bribery, Straw said.

"This bill will better help the police, prosecutors and courts to tackle bribery wherever it occurs," he said.

It would also apply to lawmakers in both houses of parliament, removing parliamentary privilege.

The legislation would also help the Serious Fraud Squad in large fraud cases where bribery is often an associated feature.

The bill follows criticism from the Organisation for Economic Cooperation and Development (OECD) that Britain's anti-bribery laws are unclear and inconsistent, with a narrow, domestic focus.

The Ministry of Justice acknowledges that criminal law is currently "old and anachronistic" with significant gaps.

But Straw said Britain was one of the least corrupt countries in the world, standing third among G8 countries, behind Canada and Germany, and standards of probity were high.

At the same time, Britain achieves far fewer prosecutions for bribery by comparison with the United States and Europe. Between 10 and 12 bribery cases are brought to court each year in Britain, according to Ministry of Justice figures.

One of the highest-profile recent fraud investigations in Britain, an arms deal between Saudi Arabia and Europe's biggest defence company BAE Systems, was brought to a halt by Tony Blair in 2006.

Blair said to pursue the inquiry could have jeopardised national security issues, leading to criticism by rights groups and the OECD, which said authorities could and should have done more to investigate the allegations of corruption.