UNION leaders last night condemned the £550,000 pay-off for the chief of troubled steel company Corus as thousands of workers on Teesside awaited news of their fate.

Tony Pedder resigned as chief executive as Corus announced huge annual losses of £458m yesterday.

His exit, with a year's salary, came as defiant chairman Sir Brian Moffat announced he would be staying to run the company until a successor for Mr Pedder was found.

Michael Leahy, general secretary of the Iron and Steel Trades Confederation, said the £550,000 payoff was ''outrageous".

''Corus employees fear for their jobs, yet the chief executive gets a half-a-million pound pay-off. It is a high reward for failure," he said.

But Teesside MP Ashok Kumar said the wrong man had resigned and that it should have been Sir Brian who had left the beleaguered company.

Calling for the Corus chairman to be stripped of his knighthood he said: "I had a lot of respect for Tony Pedder. I can't praise him enough for trying to do the best for the company in difficult circumstances.

"Sir Brian would have done everybody a favour if he had gone."

But Sir Brian remained adamant that the chief executive had been responsible for events at the company.

"It is on his watch that things happen or don't. I was asked to stay on for continuity," he said.

The fate of 3,000 Corus workers on Teesside will be decided over the next few weeks as the group looks to axe thousands of jobs.

The company said last night the timing of any job cuts would depend on their efforts to achieve further financing, including selling non-core assets.

Redcar and Cleveland councillor John Simms, a member of the Steel Action group, said: "These people do not know if they have jobs or not and it is a terrible thing to have this worry over their heads."

Barbara Harpham said five generations of her family had worked at the Teesside steelworks. "This is like a cloud hanging over them," she said. "It is awful not knowing whether you are coming or going."

Corus was formed through the merger of British Steel and Dutch-based Hoogovens in 1999, but the company has said there are no plans to de-merge.

Union leaders were locked in talks with senior managers yesterday and said they had put a number of proposals to the company.

A statement from the National Trade Union Steel Co-ordinating Committee said: "We left them in no doubt of the level of anger among our members about the management's poor performance."

Union officials will meet next week to discuss the company's response.