The group, which supplies the UK's largest clothing retailer Marks & Spencer (M&S), has been forced to close two factories.

Almost four hundred jobs will go when the firm's plant at Dormanstown on Teesside shuts down, and the rest will go with the closure of its factory at Tunstall near Stoke-on-Trent.

The job losses are the latest serious blow to hit the North East clothing industry which has been torn about by the strong pound and intense competition form cheap Asian producers.

The textile industry has also been stunned by a decision from M&S to buy more of its clothes from overseas.

Growing problems

It is that decision which has exacerbated Dewhirst's problems.

M&S has traditionally brought the majority of its stock from UK suppliers.

However after a slump in profits it has been forced to start looking for cheaper overseas suppliers.

Huge job losses

Textile industry workers marched on Parliament earlier this week to bring attention to their plight.

Unions estimate 500 textile jobs are being lost every day and that in the end tens of thousands of workers could end up on the dole.

Trade unions had expected the Dewhirst's decision.