Steelworkers were today facing the prospect of fresh job cuts and plant closures after a grim warning by steel giant Corus of a "significant" reduction in capacity.

The Anglo-Dutch steelmaker, which has axed 10,000 jobs in the past few years, said it had to reverse losses being made in its UK operation.

Given the economic outlook, this would ''inevitably'' lead to significant further capacity reductions and concentration of operations on to fewer sites.

The announcement sent shock waves across steel communities and angered union leaders, who demanded urgent talks.

Bill Morris, general secretary of the Transport and General Workers Union, said: ''The announcement is bad news but we remind the company that they are obliged to enter into meaningful consultations with us.''

A spokesman for the Iron and Steel Trades Confederation, the main steelworkers union, said: ''In 2001 when the last round of major redundancies were announced, Corus said there would be no further job losses.

''They now appear to have gone back on that commitment to British workers.

''We believe that further capacity reductions are unacceptable, especially as economic conditions in the British steel industry are improving.''

SteelAction, a group of 18 local authorities in steel areas, said at an emergency meeting in London that further cuts would ''severely undermine'' the capacity of what was still a strategic industry, vital to the nation's economy.

Chairman Roger Stone said: ''The announcement creates further uncertainty in steel communities and among workers already reeling from earlier, massive cuts.

''The Government has to decide whether it is serious about maintaining steel as a core British manufacturing industry.

''Further cuts in Corus will leave the UK's industrial policy in tatters.''

Corus said its supervisory board in the Netherlands had blocked plans for the £543 million sale of two aluminium businesses. The company has vowed to fight the decision in court.

The company employs 26,000 people in the UK and has major major steel making plants at Teesside, Scunthorpe and Port Talbot.

There are a number of other UK sites across the country, including steelmaking factories in Rotherham and rolling and finishing mills in parts of Wales.

The company is due to announce its annual results on Friday but said today it expected group operating losses to be £16 million higher at £393 million.

The company said proceeds from the sale of the aluminium businesses would finance the measures earmarked for the UK steel operation.

However, failure to complete the deal will mean the group has to look afresh for financing from equity and debt providers.

The sale of the two aluminium businesses - with operations in Germany, Belgium, Canada and China - to French firm Pechiney was announced in October. It formed part of a plan by Corus to focus on carbon steel.

However, the company's supervisory board has been accused of acting ''irresponsibly and unreasonably'' in rejecting the sale.

The main board said it had made ''far-reaching efforts'' in the last few months to gain its approval but that it had now decided to take the matter to an Amsterdam appeal court. A verdict is expected on Thursday.

The former British Steel used to employ more than 250,000 workers in the 1970s but there has been a steady decline in the industry.

More than 10,000 jobs have been axed in this country since British Steel merged with Dutch firm, Hoogovens in 1999.

Around 4,000 jobs were cut within the first year of the merger followed by a further 6,000, mainly in 2001.

A spokeswoman for the Department of Trade and Industry said: ''We understand this is a time of uncertainty for the workers. We have been and will be in contact with Corus and the unions.''