The firm's dairy farm in Stoughton will be converted to arable land, while its other base, near Billesdon, will be sold.

The firm blamed a crisis in the milk industry and said it is shutting all of its dairies across the country because they are no longer profitable.

David Gardner, a senior manager at Farmcare, the Co-Op's farming business, said he fears many small dairy farms will be forced to take similar action.

"The milk industry right across the UK has been in an element of crisis and milk prices have been extremely low," he said.

"Following on from the deregulation of the Milk Marketing Board several years ago the industry has been depressed for quite a while now and we don't see a bright future for milk production."