FLOODS Minister Elliot Morley has attacked an insurance firm that sparked panic among householders in Worcestershire and Herefordshire.

In a House of Commons debate, he accused Esure of trying to profit from a "publicity stunt".

Last month, the internet firm announced it would deny cover to any prospective new customers living in the 10 per cent of postcodes most susceptible to flooding.

Residents in places such as Worcester and Bewdley, which suffered flooding in 2000, were upset as they feared other firms may follow suit - leaving them without any affordable protection.

But Mr Morley said it had since emerged that Esure hardly provided any cover to households in flood risk areas.

He told MPs he believed the firm had made the announcement to gain publicity for the fact it could offer lower cost policies by taking this stance.

"This was a bit of a cheek - we are not aware they have ever provided significant cover," he said.

"They are cherry picking the market, which they are entitled to do in terms of going for a low risk market. Their announcement was a publicity stunt which backfired," he said.

"I cannot say I'm very impressed with Esure's argument and not at all sympathetic that they have come out of this with damage to their reputation."

Mr Morley spoke out after MP Mark Todd, a member of the Environment Select Committee and the All Party Parliamentary Flood Defence Group, said people were concerned more firms could follow Esure's example.

"It is critical householders are able to secure, at reasonable cost, insurance against flood risk," he said.

Mr Morley reassured him that Ministers were in talks with the Association of British Insurers in a bid to extend an agreement reached in 2000.

This guaranteed existing customers insurance cover for 2002, except in "exceptional circumstances." Esure has not broken this agreement.

Mr Morley said more than 274 new flood and coastal schemes had been approved at a cost of £386.4m and overall spending had increased from £309m in 1997 to £414m this year.

The Government is carrying out a review of how flood defence schemes are funded and monitored.