The Association of Labour Providers (ALP) wrote to home secretary Jacqui Smith about the "unjustifiable" decision to extend the scheme for two years.
ALP chairman Mark Boleat said the decision was taken without proper consultation and was a kick in the teeth for a sector expecting the scheme to end this April.
He said government fears about serious disturbance in the labour market were unfounded. Evidence suggested the scheme did not prevent workers coming to the UK by charging them.
"It is assumed the £90 is intended to be a deterrent to workers coming to Britain. It is not. It deters workers from registering and encourages some to operate in the flourishing informal economy."
Boleat condemned a "continual failure" to consult on the scheme, which was due to end this month. He said that the Home Office attitude to stakeholders was that "they are to be contained and managed, not involved".
He added that the association had demanded a meeting with the home secretary and called on the European Commission to investigate the legality of the decision.
A Home Office representative said: "We were not obliged to stop the scheme this year, but European law obliged us to review whether we still required it.
"We sought advice from the Migration Advisory Committee, and with the current economic outlook in Britain it wouldn't make sense to open the floodgates."