A fall-off in orders from foreign governments, as well as redundancy costs, contributed to a �6.5m trading loss last year, the National Audit Office said.

The government must accept the seriousness of the situation at the Royal Mint and get to grips with the problems

Michael Howard, shadow chancellor

The spending watchdog also revealed that it took eight months before the Mint noticed the theft of �25,000 from a safe.

The theft occurred last year at the Mint's high security plant in Llantrisant, south Wales.

No charges have been made in connection with the snatch and an investigation into the incident was wound up in May because of a lack of evidence.

The NAO blamed a series of security lapses for the theft, which contributed to the Mint's �6.5m trading loss last year.

Security lapse

The theft, of �25,680 in notes, was discovered during a stock check in December, Thursday's report said.

The Mint now faces a challenging and painful period of restructuring

Sir John Bourn

The stolen notes came from a consignment worth �40,000, which was intended for use in Bank of England presentation packs, and was being kept in a safe a secure area of the plant.

The plant is guarded by Ministry of Defence police.

Probe shelved

However, normal access and stock controls were suspended for seven months last year while the area underwent a reorganisation.

During that period, contractors working in the plant had unrestricted access.

The MoD police probe shelved in May found that neither of the two keys which opened the safe was held securely.

In addition, the safe was located away from the supervisor, and generally left open and unattended during the day.

There were no periodic stock checks for almost 11 months last year.

While there were stringent security controls in place to prevent the taking of coins, they were not designed to stop other thefts, including the removal of banknotes.

Losing money

The disclosure of the theft is a further blow to the troubled Mint, which has now recorded two successive annual losses.

It has embarked on a �12m restructuring programme in an attempt to stem its losses.

The programme will see 200 staff at the south Wales plant lose their jobs.

The Mint has also been the focus of a Serious Fraud Office inquiry over allegations of improper payments and a �5.4m damages claim from the rival, private-sector Birmingham Mint for breach of contract.

'Painful period'

NAO head Sir John Bourn warned it now faced a period of "painful" restructuring.

Sir John said: "The Royal Mint's declining financial performance in recent years is largely a consequence of the external pressures of a highly competitive global market.

"The Mint now faces a challenging and painful period of restructuring as it seeks to return to overall profitability."

The report was seized upon by the Conservative Party.

Shadow chancellor Michael Howard said: "The government must accept the seriousness of the situation at the Royal Mint and get to grips with the problems."