By Maxine Frith, Social Affairs Correspondent

They are the global brands that have raked in multimillion-pound profits on the back of sweatshop labour in developing countries.

But after a decade of denying any wrongdoing, companies such as Nike and Gap are now admitting that their workers have been exploited and abused, and have pledged to improve the conditions of the millions of people who are paid a few pence a day to make their top-selling goods.

The wholesale reform is being hailed as a victory for anti-sweatshop campaigners who just a few years ago were being derided and dismissed by the big brand names. With consumers becoming increasingly concerned with "ethical shopping", activists say firms are realising that being linked with sweatshop labour can lead to a dip rather than a rise in profits.

This week, for the first time, Nike published details of the 700 factories that make its goods in an effort to create more "transparency" for customers. The company pledged to set up a task force to ensure that its codes of conduct on pay, hours and conditions are complied with.

Extraordinarily, Phil Knight, the founder and chairman of Nike, also admitted that the firm had failed to respond to previous allegations of exploitation, and disclosed that a quarter of its factories were still not meeting minimum standards.

Just two years ago, Nike aggressively defended a court case in which it was accused by activists of lying and making misleading claims about its working practices in a corporate and social responsibility report. The company eventually donated $2m (£1.1m) to the American Fair Labour Association as part of an out of court settlement.

The clothing company Gap made a similar declaration a few months ago when it published a shocking "social responsibility" report that revealed terrible working conditions in its factories in Mexico, China, Russia and India. Gap cancelled contracts with 136 factories after the report disclosed details of child labour, the virtual slavery of workers and working weeks in excess of 80 hours. Levi Strauss, the jeans company, is now being praised by anti-sweatshop campaigners for working with unions and activists to improve conditions in its factories, when just a few years ago it was accused of a "two fingers" attitude towards allegations of exploitation.

Mick Duncan, the founder and secretary of the campaign group No Sweat, said: "When the protests and campaigns first started 10 years ago, the companies were really bullish - they either completely denied there was a problem or adopted a 'so what?' attitude. The real change we have seen in the last year or so is that they are putting their hands up to it and admitting that they have got a problem.

"There is a still long way to go but we are beginning to see real movement on this issue."

Campaigners have changed their tactics in recent years, from backing boycotts and protesting outside city stores, to playing companies at their own game and then working with them to improve conditions.

The protests started in America in the 1990s, when Levi Strauss moved its operations from California to factories in Mexico. But the campaigns were run by the big American unions and their attitude was more protectionist than focused on the plight of foreign workers. Then in the mid 1990s, students became involved, staging protests on behalf of Mexican workers and supporting strikes and attempts to organise local unions.

When No Sweat was established, it decided not to back boycott campaigns. Mr Duncan said: "Boycotts just meant that people don't buy the goods, companies close down factories and people lose their jobs. What we have switched to doing is working on the ground with the workers and local unions, and working with the companies to improve conditions and pay."

Activists have also used slick poster campaigns and detailed research to raise awareness among consumers of the issue. Sam Maher, of the protest group Labour Behind The Label, said: "These companies are obsessed with branding and spend millions of pounds on advertising to get a very particular image of their products across. By raising awareness of sweatshop labour, that really tarnished the brands, and hit these companies where they hurt."

Having been "fobbed off" in the late 1990s by companies issuing codes of conduct, which were then routinely broken, activists have now piled pressure on the companies to raise monitoring standards and ensure compliance. And in the David and Goliath battle of the small activists against big business, even the companies themselves are admitting defeat.

Hans Faber, the senior manager in corporate communications for Nike Europe, said: "There have been problems in the past and we admit that, and one of our weaknesses was that we thought we could sort these out on our own. We are now working with NGOs and governments, and the campaigners, to make sure standards are raised, because we care about the people who work for us, and of course our customers."

But concerns remain over the continued abuse of garment workers around the world - 70 per cent of them are women, particularly with the ending in January this year of the World Trade Organisation's multi-fibre agreement. The MFA was established in the 1970s and set international quotas for textiles, in an effort to protect the industries of countries with higher manufacturing costs from a flood of cheaper foreign imports.

Campaigners are worried that the scrapping of the agreement will lead to a huge shift in manufacturing to countries with the cheapest costs but the worst record on working conditions, such as China. And despite some companies' repentance and reforms, other top-name brands are still using sweatshops. Among those on the target list of campaigners are Tommy Hilfiger, Umbro and Fila.

Changing practices

NIKE

BEFORE: Along with Adidas, Nike controls 49 per cent of the sports shoe market and employs more than 600,000 people in contract factories. Workers in Indonesia, Thailand and other countries have complained in the past of 77-hour weeks, a ban on unions and dangerous conditions in which employees have lost limbs through crush injuries.

NOW: It has published its first corporate and social responsibility report (CSR) in four years, with details of all its factories and a pledge to increase monitoring of working conditions.

GAP

BEFORE: One of several companies sued in 1999 by workers on the island of Saipan in the western Pacific over conditions in its garment factories. Gap, along with the other firms, paid a $20m settlement after the court heard of "indentured" workers, withheld wages and forced overtime.

NOW: Four months ago it published a "mea culpa" CSR report in which it admitted to the failings and announced that it was cancelling contracts with 136 factories because of low pay and hideous working conditions.

* LEVI STRAUSS

BEFORE: Was accused of contracting to factories in Haiti and Mexico where workers have been sacked for being union members, as well as using low wages to prop up profits.

NOW: When the campaign group No Sweat uncovered evidence of abuses at a factory in Mexico recently, Levi Strauss sent its own investigators, accepted the accusations were true and worked with the contractor to ensure unions were recognised. The jeans maker has also started to buy some of its cotton from organic sources.