Chris Leslie, Labour's Treasury financial secretary criticised the size of the government's bank levy during a House of Commons debate, Money Marketing reports.
The politician claimed the Conservative-Liberal Democrat coalition has missed out on the chance to place the country's banks on a fair tax basis.
He said a proper redress for the crisis should be strived for, but added: "That is not what the government are seeking with this pathetically small bank levy proposal."
Mr Leslie said there needs to be an examination into the rationale behind the Treasury's decision - taken last November - to switch the threshold approach to a tax-free allowance where banks only pay the levy on assets over Â£20 billion.
Business secretary Vince Cable recently claimed banks in the UK have been misleading the public with regards to the amount of money being lent to small firms.
By Tony Aynsley