Production will be shifted to Gloucestershire and east London

The company said it was impossible to expand and modernise on the site at Station Yard.

Production at the plant, which opened in 1934, would be transferred to Gloucestershire and east London.

The Transport and General Workers' Union (T&G) reacted angrily to the closure, which is expected to be complete by November at a cost of �3m.

Dairy Crest, which bought the plant from Unigate in 2000, said it was likely all 164 employees would lose their jobs and accepted relocation would be very difficult.

'Devastating blow'

Company spokeswoman Sinead Noble said: "If we were going to keep it we would have to modernise it and make it bigger and better but we can't because the plant is effectively landlocked between the railway station and housing.

"This decision has not been taken lightly."

The T&G said the announcement was a "devastating blow".

Spokesman Dave Springbett said: "Dairy Crest is probably the biggest single employer in Totnes.

"This closure will be a huge blow to the town. We have nearly 150 members there.

"We cannot let this closure plan go unchallenged."

Dave Nolan, who has worked at the plant for 14 years, said: "I'm coming up to 60, but where do I go from here?

"Generations of my family have worked here."

'Loyal' workforce

The plant produces milk for local deliveries as well as the Morrisons and Sainsbury supermarkets.

Humphrey Temperley, Devon County Council's Executive Member for Economy & Regeneration, said the closure was a "real blow", coming after the decision last year by Dartington College of Arts to move to Falmouth.

He said: "We will do all we can, working with partners, to address this situation, to help find jobs for the loyal and effective workforce and to find new uses for the site."