Wrekin Construction was this week forced into administration putting at risk up to 1,100 jobs.
The firm is thought to have £50M worth of orders on its books but has had short-term financial difficulties.
It sought help from its bank - the Royal Bank of Scotland last year.
Conservative MP for The Wrekin Mark Pritchard said: “I alerted the business secretary [Peter Mandelson] to the fact that the company was experiencing short-term financial difficulty, and needed strong support and help from the Royal Bank of Scotland, back in December 2008.
“The business secretary has done absolutely nothing to help the company,” he said.
The firm’s 600 direct employs are at risk of redundancy, while a further 500 would also be affected - all in Shropshire, the West Midlands and Glasgow.
“Those massive job losses were avoidable,” said Pritchard.
“As I have said, the company has been around for nearly 50 years… It is profitable. It is an absolute scandal that although ministers knew that this was avoidable, the government have done nothing to save jobs