Whistleblowers must be given proper support so they have the courage to come forward, the chair of the Commons Public Accounts Committee has said.
Margaret Hodge revealed six out of 10 people would not speak out over fears of reprisals from bullying colleagues.
She told ITV News there must be tougher government sanctions against this so it does not have a detrimental effect on uncovering scandals in the future.
Government ministers have been accused of failing to protect whistleblowers despite their role in exposing a series of major scandals.
The Commons Public Accounts Committee said the treatment of whistleblowers was often "shocking," with bullying and harassment from colleagues.
However, government departments were unable to say whether any action had been taken against their persecutors.
The committee highlighted the important role played by whistleblowers in uncovering the scandals at the Mid Staffs NHS hospital trust and policing of the Hillsborough football stadium tragedy.
A former NHS whistleblower has warned the 1000 confidentiality clauses preventing former public sector employees from speaking out about dangerous conditions at work, are only "the tip of the iceberg".
NHS whistleblower Gary Walker told Daybreak despite the Public Accounts Committee's best efforts, they "could not get the answers" on how many people hd signed a gagging order from the Treasury.
"Nobody in Government departments knew how much was being spent, so they asked the National Audit Office to look - they couldn't find out because the councils and other public bodies could not tell them.
"We are only looking at the tip of the iceberg."
The Public Accounts Committee raised concerns over a number of high profile cases where chief executives were either paid amid a scandal or prevented from speaking out further.
- Former Morecambe Bay NHS Trust chief executive Tony Halsall was paid £225,000 when he stood down amid concerns over a string of baby deaths.
- Gary Walker, the head of Lincolnshire hospital, was gagged after he raised concerns about standards.
- £120,000 offered to buy the silence of an NHS whistle-blower in the case of the death of Baby P.
Public bodies "reward failure" so they can "avoid attracting unwelcome publicity" by making would-be whistleblowers and failing chief executives sign gagging orders, the head of a group of influential MPs said.
A powerful groups of MPs is "deeply concerned" about the use of "gagging orders" to prevent public sector employees from speaking out about dangerous problems at work.
The Public Accounts Committees (PAC) said confidentiality clauses in compromise agreements were being used to pay off employees who wanted to highlight concerns.
Inadequate monitoring by the Government meant it was now impossible to know how many of these were in use or whether they should have been signed off in the first place.
Investigations by the National Audit Office (NAO) last year found the Treasury had signed off more than 1,000 special severance payments linked to compromise agreements for departing staff since March 2010.
Over £28.4 million was paid out - but the true figure will be much higher as this does not include local government, the police, the BBC, or private contractors.