There are fears of contamination from sheep droppings

The loch was suspected of being the source of an outbreak of the disease in Glasgow last year, although no link was ever proved.

Chief Executive Charlie Cornish said: "The decision has been taken due to a combination of reasons.

"Firstly, our farming interests overall make a loss and as a public authority, we have a duty to minimise business operations which may need to be subsidised either now or in the future.

"We need to demonstrate to our customers that we are as cost-efficient as possible, and minimise the degree by which charges have to increase.

"Secondly, non-core business operations, especially those which are loss-making, as in this case, require serious re-assessment.

"Thirdly, the authority also has cost efficiency targets to take into consideration it is required to meet the Scottish Water Industry Commissioners efficiency targets, totalling �80m per annum, by 2005/6.

"The fourth reason for our decision to withdraw from our sheep farming interests is to minimise any potential risk of contamination to the Loch Katrine water supply by animal droppings."

The Trossachs scenery is very distinctive

He added: "Our over-riding objective as a public water authority must be to safeguard public health and we believe it is prudent to be proactive and withdraw from sheep farming as a precautionary measure following the cases of cryptosporidiosis in Glasgow during late spring 2000.

"The outbreak control team established by Greater Glasgow Health Board concluded that the organism responsible was waterborne, although no conclusive evidence identified the actual source."

Claims that the decision will be a devastating blow to the local economy have been dismissed by the authority who insist no jobs will be lost.

Mr Cornish said: "Our immediate priority will be to work closely with the six shepherds and one team leader currently involved in our sheep farming operations to ensure that they are provided with suitable alternative options, and/or retraining, and can take advantage of other opportunities within the authority."