The new Federation Brewery site was built in 1979

The decision follows a vote last month in which delegates from workingmen's clubs voted to sell the brewery to rivals Scottish and Newcastle (S&N).

The "Fed" as it is known, was famed for supplying beer to the House of Commons.

The sell-off will mean about 100 jobs losses. Chief executive, Geoff Hodgeson, said the atmosphere at the shareholder meeting was "downcast".

"None of us have wanted events to take this course.

"But I think the shareholders have recognised that we have taken the mature decision.

Beer supplies

"That is to make sure that shareholders leave the business with a significant amount of money, instead of waiting two or three years and the unfortunately not getting anything."

S&N will pay around �16m for the Fed's assets, which will be used to pay off debts, and give 300 member clubs a share of an �8m payout.

S&N has already struck a �7m deal to brew Newcastle Brown Ale across the river Tyne at the Gateshead site.

The decision by shareholders will see the Fed's brands, which include LCL pils, Northumberland Smooth and Fed Special, also going to S&N's parent company Scottish Courage.

The Federation was set up in 1919 after workingmen's clubs struggled to get beer supplies following World War I.

Job losses

The clubs joined forces to buy their own brewery at Forth Banks in Newcastle. The current brewery was built in Dunston in 1979.

The Office of Fair Trading (OFT) and the Financial Services Authority will also need to ratify any final decision to sell.

S&N opted to move production of Newcastle Brown Ale to Gateshead after it said the 120-year-old Tyne Brewery is no longer commercially viable.

Union officials hit out at the move, which will see more than 100 jobs losses.

S&N said a move to Dunston would provide the opportunity to brew both lager and ale, as well as offer extensive packaging facilities and room for development.