The government has cancelled a major contract with P&O Ferries after it sacked hundreds of staff earlier this year.
The Home Office said it was ending its agreement with the firm to provide contingency travel services to "juxtaposed ports".
These are where British staff operate border controls in Belgium and France to check passengers and goods coming to Britain.
It comes after P&O Ferries, whose ships sail across the English Channel, North Sea and Irish Sea, laid off nearly 800 workers in March over video call.
The firm then went on to hire cheaper agency staff, sparking criticism from trade unions and politicians alike.
"We stand against firms who exploit loopholes and undermine workers' rights," Home Secretary Priti Patel said on Twitter.
Transport minister Grant Shapps now plans to bring in laws making sure ferry operators using British ports pay the national minimum wage.
A criminal investigation into P&O Ferries' move has been launched.
DP World would not comment. The Home Office has been approached for comment.
Earlier in the week, the boss of the ferry operator's Dubai-based owner DP World, Sultan Ahmed bin Sulayem, told the Financial Times that it was too late to reverse the job cuts.
He added that the government "can't do anything now" as the decision was in the past.
When the 800 P&O staff were first told of the layoffs, some members of staff refused to leave one of the ferries in protest.
At the time, a P&O spokesperson said the firm needed to lay off workers due to losing £100million year on year.
The spokesperson said P&O was "not a viable business" as it was.
They added: "Our survival is dependent on making swift and significant changes now. Without these changes there is no future for P&O Ferries.
"These circumstances have resulted in a very difficult but necessary decision, which was only taken after seriously considering all the available options."
All staff on board P&O ferries were ordered to leave, some with just five minutes' notice - or faced being hauled off by security staff wearing balaclavas .
A woman whose son and husband work for P&O slammed bosses for the "highly immoral" and "insulting" way hundreds of crew members were made redundant to make way for cheaper agency workers.
The RMT union said the issue was "one of the most shameful acts in the history of British industrial relations".
Labour MP Diana Johnson said the mass lay-offs were "reminiscent of the worst Thatcherite policies".
