Nike Inc. said Friday that it has found major worker rights violations at one of its Malaysian contract factories, including squalid living conditions, garnisheed wages and withheld passports of foreign workers.

The investigation began more than a week ago following a report by Australia's Channel 7 television of "human trafficking on a major scale" of foreign workers at the factory.

Nike said its investigation confirms there are serious breaches of its code of conduct and has taken numerous steps to immediately protect the workers.

Hannah Jones, Nike's vice-president for social responsibility, said she would not qualify the violations as human trafficking but said the investigation is ongoing.

"This isn't about definitions, this about action on the ground to help these workers," Jones said.

About 1,200 employees work at the Hytex factory, which has produced T-shirts for Nike for 14 years.

Because of a shortage of labour in Malaysia and poor employment opportunities in their home countries, a recent influx of workers have come from Bangladesh and other areas.

Nike confirmed many of the recent migrant laborers paid a fee in their home country to agents to get the jobs. Once in Malaysia, the factory held their passports.

Their wages were also withheld until a $375 US foreign worker fee the Malaysian government requires from the factory was repaid. Nike said the fee is less than a quarter of a worker's average annual income.

The workers were also forced to live in cramped, filthy factory-provided housing.

Nike said all workers are being transferred to Nike-inspected and approved housing. Roughly 100 have already been moved and the transition will be complete within a month.

All workers will be reimbursed for any fees and going forward, the fees will be paid by the factory. All workers will have immediate access to their passports and any worker who wishes to return home will be provided return airfare

Nike said it last investigated the factory in February and found poor record-keeping and management issues but said the influx of workers had not occurred yet and the housing was not identified as an issue.

Nike said it is reviewing its entire Malaysian contract factory base within the next 10 days and will require all its factories there to institute the same policies.