Ministers have promised to take action to stop the "clocking" of cars, reducing their on-screen mileage and boosting their re-sale value.
The Sun reported that there are up to 100 firms in Britain which offer to wind back cars' digital screens - reducing the recorded mileage - using hi-tech computer equipment.
But while it is an offence to knowingly sell a "clocked" car without declaring the correct mileage, the paper said that just carrying out the work was legal.
Business Minister Anna Soubry said that there appeared to be an "alarming legal loophole" which firms were exploiting.
"If people are evading quite clear laws and regulations that we as society said they should not, that needs sorting out, " Ms Soubry, who is responsible for trading standards, told The Sun.
"I will look into this, along with my colleagues at the Ministry of Justice and in the Crown Prosecution Service, and we will stop it."
A Government spokesman said: "The Government will look into this matter. Clocking with the intent to sell is a criminal offence and any suspected breaches should be passed on to Trading Standards to investigate."