Anyone know what this legislation is?

[hattra]

Agency response

Agency has responded (I paraphrase)

"Er, well, its not ACTUALLY a legal requirement, but some of our clients are making it part of their SLA with us, and we think it will be a legal requirement soon, so if you've no objection, old chap"

I don't want to p!ss them off, but I don't feel like giving copies of my ID documents to someone who's not entitled to ask for them

[Lucifer Box]

Just be firm and say no, you will provide them with a letter on company headed stationary signed by the MD confirming that you are entitled to work in the UK. No agency will throw away a commission over this.

[Mordac]

Agency has responded (I paraphrase)

"Er, well, its not ACTUALLY a legal requirement, but some of our clients are making it part of their SLA with us, and we think it will be a legal requirement soon, so if you've no objection, old chap"

I don't want to p!ss them off, but I don't feel like giving copies of my ID documents to someone who's not entitled to ask for them

Those are not good enough reasons.
Remind them of their obligations under the DPA - unless specifically licensed to hold this information by the DTI, it is illegal for them to do so.