Hauliers are demanding tough penalties to stop foreign transport companies entering Britain and driving them out of business.

Haulage bosses in the region say there are real fears that foreign companies are pricing them out of the market because they do not pay tax or toll fees in Britain.

It follows an influx of foreign hauliers offering to undercut local businesses, who are forced to pay huge tax bills when they drive across Europe.

Foreign hauliers also benefit from cheaper fuel abroad - paying half as much as their UK counterparts.

During one recent trip to Italy, C and N Transport Services in Spennymoor, County Durham, whose main business is in European transport, spent £338 on tax and road toll fees.

Owner Karen Lawson said: "There are many foreign companies starting up in business now who are really knocking their prices down because they don't have to pay the toll fees and tax when they come over here.

"In the last six months I can think of 10 companies that have switched to foreign transport. It's not because our prices are so high it's because they can afford to do it for nothing but wages."

Recent Government figures revealed that 30 per cent of the international market was carried out by UK hauliers in 2001, compared with 53 per cent five years ago.

Using cheap labour from Eastern Europe also gives huge advantages to foreign companies. The same statistics showed that one in 12 truckers entering Britain are from Eastern Europe - compared with one in 20 five years ago.

Steps being taken by the Government include introducing a lorry road user charge within four years to ensure foreign hauliers pay their way.

But Anne Preston, chairman of haulage firm Prestons of Potto, near Stokesley, North Yorkshire, and who sits on the board of the Road Haulage Association said: "There are steps being taken but it is going to take a long time for it to work and in the meantime the foreign drivers are going to get a stronger foothold in the UK. "It is a major problem and one that is worrying the industry tremendously at the moment."