Firms which blacklist workers should be blacklisted themselves and barred from being given publicly funded contracts, according to a committee of MPs.
The Scottish Affairs Committee said companies that had been caught blacklisting should undertake a process of "self-cleaning", including an admission of guilt and paying compensation.
The move puts more pressure on construction firms which used a blacklist of thousands of workers, whose names were sometimes included merely for raising health and safety issues.
The secret list of more than 3,000 names was discovered five years ago after a raid by the Information Commissioner's Office on the Consulting Association, which has since shut down, but unions believe blacklisting has continued in the building trade.
The MPs said many of those on the blacklist had still not been told about their inclusion despite long-running campaigns by unions to halt the practice and win compensation.
Some people believe they have been denied work because their name is on the blacklist.
The committee said an agreement between unions and French energy giant EDF outlawing blacklisting on the Hinkley Point C nuclear power station in Somerset should become "best practice" for the industry.
Committee chairman Ian Davison, Lab/Co-op MP for Glasgow South West, said: "Had these companies not been caught, blacklisting would still be happening, and indeed we have heard evidence that it is still going on in some areas.
"Although blacklisting is illegal now, it is not enough to just end the practice.
"Reparations must be made, and steps must be taken so that we are pro-actively preventing these practices - and the health and safety problems they lead to - rather than just stopping it when it happens.
"Companies that are caught blacklisting now, or do not make the proper reparations, or do not apply agreed standards of practice in their contracts, should be 'blacklisted' themselves and barred from obtaining any publicly funded work.
"It is impossible to fully quantify the damage that may have been done to people's careers and livelihoods, and to their families, as well as to health and safety on site, by these practices, but restitution must be made.
"It must not be left just to the companies themselves to determine what this should be, but it must be agreed after negotiations with the relevant trade unions and representatives of blacklisted workers.
"It must also be applied to all the victims of blacklisting who have yet to be identified, and where the victim has died, compensation must go to their families."
The committee paid tribute to the Welsh Government for taking a "clear and unequivocal ethical stance" against blacklisting and to the Blacklisting Support Group, which has campaigned over a long number of years.
" We will now be writing to the coalition government , to the Scottish, Welsh and Northern Irish governments and to local authority associations, urging them to adopt our proposals and to use their financial power to ensure that blacklisting is abolished, direct employment is made mandatory and that health and safety is given ever greater priority," added Mr Davison.
Justin Bowden, national officer of the GMB union, said: "For two years, GMB has campaigned for the blacklisters to be blacklisted and we very much welcome the call from the Scottish Affairs Committee for this to happen if the construction companies fail adequately to apologise to, and compensate their victims.
"The position of the all-party committee could not be any clearer - that local, regional and national government should not spend a penny more of taxpayers' money with any company guilty of blacklisting, past, present or future, who has not self-cleansed."
The report is the latest in a series of moves against blacklisting.
The GMB said it welcomed a vote by MEPs in the European Parliament yesterday backing measures to ensure that blacklisting was illegal under EU law, while Islington Council in London announced it would not award contracts to firms involved in blacklisting.
Legal action is being taken on behalf of blacklisted workers, while negotiations are being held between unions and a group of companies over compensation.
Unite union assistant general secretary Gail Cartmail said: " The report is a clear call to the blacklisters to stop dragging their feet and refusing to apologise.
"It is time to start compensating and re-employing blacklisted workers. Failure to do so could lead to contractors forfeiting crucial contracts as momentum builds to run the blacklisters out of town."
Shadow trade minister Ian Murray said: " Blacklisting is a national scandal which has ruined lives, denying thousands of workers employment and leaving them unable to making a living simply for belonging to a trade union or for raising legitimate health and safety concerns.
"The next Labour government will hold a full inquiry into the blacklisting scandal to examine the unanswered questions which still remain and to ensure appropriate sanctions are in place. Given the serious allegations that blacklisting took place on public construction projects, government must be at the forefront of preventing it by ensuring there are proper safeguards in place in procurement and in the way contracts are delivered.
"The companies which participated in this industry blacklist must not only show remorse for what they have done, but must back this up with deeds. The compensation scheme announced last year was a step forward, but issues remain which still need to be resolved. I hope further progress will be made on this in the coming months so that it can provide proper redress to victims swiftly and commands confidence."