The UK must not block attempts by the European Parliament to make banks reveal more about their finances, Christian Aid has said.

In addition to capping bankers' bonuses, the new legislation also requires banks to report their finances on a country-by-country basis, including details of profits and taxes paid separately for each country they operate in.

Christian Aid's senior adviser on economic justice, Joseph Stead, said such reporting would make it easier for tax authorities to spot whether banks were artificially shifting profits out of the countries where they were made and into tax havens.

"Such profit-shifting is currently a severe problem for many governments, including the UK's but also those of developing countries," he said.

According to Christian Aid estimates, tax dodging by multinationals costs developing countries $160bn a year – more than they receive in aid.

Mr Stead said country-by-country reporting would have a major impact on tax dodging and benefit rich and poor countries alike.

The legislation requires the approval of a majority of the European Union's 27 member nations to come into effect, but Britain is opposed.

Mr Stead said: "The only barrier remaining is for EU Member States to agree formally to this change, and there are rumours the UK may seek to object.

"Christian Aid urges the UK Government to support the European Parliament's reform, which is entirely consistent with what UK ministers have said about tackling aggressive tax avoidance and corruption."