C&W reported a pre-tax loss of �6.37bn ($10.6bn) in the last year, after writing down the value of some of its businesses and incurring costs for selling off some operations.

The company has suffered a turbulent past three years in which its stock market value has plunged 90%.

In November, it announced it was to cut 3,500 jobs worldwide and close 23 of its 42 international data centres.

C&W has suffered after it invested heavily at the height of the technology boom in an effort to get new business in providing internet and e-mail services to big multi-national customers.

Dividend suspended

Chief executive Francesco Caio said: "As of today, the group will have a simpler organisation structure that, by removing the global and regional divisions, will ensure lower overheads, clear accountabilities and more effective transfer of knowledge and skills."

Cable & Wireless also said it was suspending the dividend payout to shareholders. The company has seen its finances ravaged by problems at its Internet and data services division Global.

Employee representatives are hopping mad about these job cuts CWU national officer Donald McDonald

The UK job cuts will be implemented over the next 18 to 24 months.

C&W has major sites at Birmingham, Manchester, Bracknell and Milton Keynes, though it is not clear where the jobs will go.

Cable and Wireless chief executive Francesco Caio said the decision to pull out of the US was made because its business there was not sustainable with its current cost structure.

Mr Caio said: "As of today, the group will have a simpler organisation structure that, by removing the global and regional divisions, will ensure lower overheads, clear accountabilities and more effective transfer of knowledge and skills."

Shares reverse fall

The Communication Workers Union accused the company of pursuing a policy of "slash and burn".

National officer Donald McDonald said almost a third of workers at Cable & Wireless would lose their jobs in the latest cuts.

The union is not recognised by the company and Mr McDonald said there had been no consultation with the firm's staff forum.

The current management have finally prescribed strong medicine Roger Richards, analyst, Prudential-Bache

"Employee representatives on the forum are hopping mad about these job cuts. We will be asking the worker representatives to challenge the decision and demand that the redundancies are justified by the management.

"Everything possible should be done to try to find alternative employment."

Cable & Wireless shares were up 4.13% at 100.75 pence in lunchtime trading, making them the FTSE 100's biggest gainer.

Earlier, before a presentation to analysts, the shares had been more than 10% down on the day.

Roger Richards, an analyst at Prudential-Bache, said: "Our provisional conclusion is that the current management have finally prescribed strong medicine.