According to an ICM survey of 10,000 small firms for the Federation of Small Business (FSB), both central and local government continued to pay suppliers late throughout the recession.
The FSB-ICM Voice of Small Business annual survey found that central government paid 31% of invoices late, second only to the private sector, which had a 34% late payment record.
This was in spite of central government's promise to pay within 10 days at the start of the recession and the pledges of its Prompt Payment Code, which has previously been criticised for its toothless approach to the problem of late payments.
FSB national chairman John Wright said: "It is shocking that after the government put the Prompt Payment Code in place so many businesses are still being paid late.
"The public sector needs to take the lead in more than word alone and set an example that paying late isn't acceptable, as this problem persists in the private sector."
According to the most recent late payment data from Bacs, UK SMEs are collectively owed £30.4bn, a figure which has risen more than £11bn in the past two years from £18.6bn in 2007.
Michael Chambers, managing director at Bacs, said: "While many businesses that owe money to others do undoubtedly have problems in paying bills quickly, there is a question mark over those who may be playing the system and delaying payment for as long as they can."
In response to the ongoing problem, the FSB is lobbying for the introduction of a 'social clause' in all government contracts, which would impose penalties if payments are routinely made outside of contract terms.
"Small businesses rely on receiving payments within the timescale agreed to maintain cashflow to ensure the business can run on a day-to-day basis. This is why the FSB is calling for the introduction of a social clause in all government contracts," said Wright.
"However, this clause must have teeth, and any business found to persistently breach the terms should be fined and be warned they may lose contracts in the future. This will give small businesses confidence and go far to change the poor record of behaviour on this issue."
In addition to the poor record held by UK central government, local government paid 25% of invoices late, while the NHS and the London 2012 Olympics paid 29% and 25% of invoices late respectively.
