The business secretary says Ofgem took the word of energy firms and ” had the wool pulled over their eyes”.
Energy companies have until Tuesday to decide what action they will take for customers who may have had prepayment meters wrongfully installed.
Business Secretary Grant Shapps said energy suppliers need to refocus their efforts on the consumers “at the end of this abhorrent behaviour”.
It follows a series of reports about the forced installation of prepayment meters in people’s homes.
Regulator Ofgem said it shares Mr Shapp’s shock at the revelations.
BBC News has learned that magistrates courts in England and Wales were advised to approve bulk applications by energy companies allowing them to forcibly install prepayment meters into people’s homes.
According to a leaked document, magistrates were told that it was “irrational” to refuse such warrants and that rules requiring them to question the applications were “disproportionate”.
While The Times found debt agents for British Gas had broken into vulnerable people’s homes to fit meters.
On Friday, the energy regulator ordered all domestic energy firms to stop the forced installation of prepayment meters.
In the wake of the revelations, Mr Shapps has told Ofgem to toughen up on suppliers, accusing the regulator of too easily “having the wool pulled over their eyes” and taking what energy companies are telling them at face value.
“They need to also listen to customers to make sure this treatment of vulnerable consumers doesn’t happen again,” he said.
Ofgem said energy firms are legally required to submit “an honest representation of the facts” and the regulator “required assessments to be signed off by their boards”.
It said it would be an “extremely serious matter for any licensee to provide misleading or purposefully inaccurate information”.
Further reviews would be carried out to “cross examine what we have had reported to us with direct reports from customers and wider stakeholders, and potentially those involved in delivery of services.”
Labour shadow business secretary Ed Miliband said Mr Shapps “sat on his hands” and failed to take action over the issue.
“Grant Shapps is the do-nothing business secretary, who has sat on his hands in the face of the scandal of forced installation of prepayment meters, and simultaneously waves through energy companies making record profits at the expense of the British people,” he said.
“Now, even after the scandal at British Gas and the millions disconnected by the back door, he still won’t adopt Labour’s call for a total and ongoing ban on the forced installation of prepayment meters until there is wholesale reform of a discredited, rotten and callous system. “
There are more than four million UK households on prepayment meters.
The investigation by the Times revealed how debt agents working for Arvato Financial Solutions on behalf of British Gas forced their way into the home of a single father-of-three to install a prepayment meter.
British Gas – which is the country’s largest supplier with 7.26 million customers – suspended forcefully installing prepayment meters until at least after the winter. In response to The Times’ findings, Chris O’Shea, the boss of Centrica which owns British Gas, told the BBC: “There is nothing that I can say that can express the horror I had when I heard this, when I read this. It is completely unacceptable.
“The contractor that we’ve employed, Arvato, has let us down but I am accountable for this.”
EDF, Britain’s second largest supplier, also suspended the forced installation of prepayment meters and is reviewing its practices.
Ovo Energy said it suspended its warrant activities in November, and Octopus Energy said it was “not installing any at the moment” and rarely had done.
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