The bulk of the 800 job losses will be at the Paignton site

Bookham Technology, which took over the Nortel plant in Paignton in 2002, says it is making the jobs losses to help reduce costs by 25%.

Chief Operating Officer Liam Nagel is meeting employees on Wednesday to discuss the decision.

The firm is shedding a total of 800 jobs across its UK operation - which includes sites in Oxfordshire and Northamptonshire.

We met with the company last month and were not informed of any particular problems John Taynton, South West Regional Development Agency name here

The job losses are a massive blow for the Paignton site, which three years ago was the biggest single employer in the South West.

While under Nortel's ownership, the plant employed 5,500 in 2001.

By the time Bookham Technology, which also has UK sites at Milton, near Abingdon in Oxfordshire, and Caswell in Northampton, took over the factory in late 2002, the workforce had been slashed to 700 as the telecoms hardware industry struggled to cope with a devastating recession.

However, in recent months there had been some job growth for the Brixham Road factory as worker numbers reached about 1,000.

BBC South West Business Correspondent Neil Gallacher said: "This factory is bearing the brunt of Bookham's cuts, which has nine sites worldwide.

"The dollar exchange rate is part of their problem at the moment - that's badly affecting the company's bottom line.

"However, of the jobs that will survive into the future, there will be about 400 research and development jobs as the factory becomes about 60% research and 40% production.

"That's still something that many business leaders in the region would give their arm for to keep here.

John Taynton of the South West Regional Development Agency said: "This news is a blow for Torbay and sad for the workers involved.

"We met with the company last month and were not informed of any particular problems, although we knew that they were transferring some jobs to the Far East, with the loss of about 70 posts.

"We will get in touch with the company again to see if there is anything else we can do."