A Legco inquiry in 2000 held retired housing secretary Dominic Wong Shing-wah, former director of housing Tony Miller and other senior officials responsible.

The Legco report found housing production targets set before the handover were unrealistic, overworking officials. It stopped short of recommending any punishment even though some public housing blocks had to be torn down or fixed, costing an estimated $1 billion.

Mr Suen, speaking at the end of a five-hour, two-day debate, said the Civil Service Bureau had initiated disciplinary action against the officials following an earlier government inquiry.

'I agree that disciplinary action should be taken against staff members who were negligent in their duties,' he said.

Frederick Fung Kin-kee, of the Association for Democracy and People's Livelihood, said Mr Wong and Mr Miller should be censured and punished.

But his proposed amendment to single out the pair for condemnation was rejected by other parties, which said the government should be allowed to decide how civil servants should be disciplined.

Members instead passed an amended motion urging the government to impose appropriate punishment on those held responsible. Describing the scandal as distressing, Mr Suen conceded that confidence in public housing had been compromised. He said a series of improvements had since been made.