Lady Scotland oversees criminal prosecutions in England and Wales
Baroness Scotland has sacked her housekeeper from Tonga, because she was allegedly working in the UK illegally.
The attorney general employed Loloahi Tapui, 27, for six months, the Daily Mail reported.
She was a Home Office minister when laws were passed to fine bosses who employ illegal workers up to £10,000.
Downing St said Gordon Brown had "full confidence" in Baroness Scotland who says she hired Ms Tapui in "good faith" and thought she was entitled to work.
It is understood Ms Tapui arrived in the UK in 2003 on a temporary visa which has since expired.
Registered for tax
A spokesman for Baroness Scotland said she had "never knowingly employed an illegal immigrant".
"She hired Ms Tapui in good faith and saw documents which led her to believe that Ms Tapui was entitled to work in this country," the spokesman said.
He added that Ms Tapui, who is believed to have lived locally and been married to a UK national, was in registered employment before working for the attorney general.
He said she was registered for tax and national insurance prior to her being hired and that the attorney general had paid tax and national insurance on her wages.
"At no stage prior to the matter being raised did Baroness Scotland believe there was any question over Ms Tapui's entitlement to work."
"Ms Tapui has now been dismissed with immediate effect."
Under the Immigration, Asylum and Nationality Act, employers who knowingly take on an illegal worker face a two-year prison sentence and an unlimited fine. Those who unknowingly take on illegal workers face a maximum £10,000 fine.
When measures came into force the then home secretary Jacqui Smith said they would make it easier for employers to carry out identity checks and would deter "slipshod recruitment methods".
Keith Best, of the Immigration Advisory Service, said it meant employers had to comply with Border Agency guidelines - including checking visa status on passports. Those who fail to do so can face a "civil penalty" of £10,000 per worker.
"The perusal of a National Insurance certificate in itself is insufficient to escape a civil penalty," he told the BBC.
If the documents checked were not those the Border Agency requires, it was "inevitable" she would face a civil penalty, he said, but added it was extremely unlikely she would face a criminal prosecution.
"To be prosecuted criminally for employing somebody illegally, you have to knowingly do so. And I would have thought it's incomprehensible or beyond doubt that a government minister would knowingly employ an illegal migrant."
Labour MP Keith Vaz, chairman of the home affairs select committee, said he believed Baroness Scotland would have "satisfied herself" that all the necessary checks had been done.
"I am sure she would have done everything that was proper and right," he told BBC Radio 4's World At One.
However, he said there were "grey areas" in how the law was being interpreted and a single database was needed to give employers access to information about an individual's immigrant status, right to work and ability to claim benefits.
The Conservatives said the attorney general had got it "badly wrong" over the issue.
Shadow home secretary Chris Grayling said: "This is a government that says all small employers should be prosecuted if they don't know the immigration status of their employees and yet we have senior ministers who can't be bothered to make the checks themselves.
The BBC's political correspondent Gillian Hargreaves said that until Baroness Scotland clarified what documents she viewed prior to hiring Ms Tapui she would remain under pressure.
Baroness Scotland was appointed attorney general by Gordon Brown when he became prime minister in June 2007, becoming the first woman to hold the post.
She advises the government on issues of domestic and international law and attends cabinet when matters with major legal repercussions are discussed.