The Hemel Hempstead-based Frogmore Mill was the world's first commercial mechanised paper mill when it was established in 1803 and has been producing paper for more than 200 years.

However, the effects of the downturn may see it close its historic machine down for at least six months.

In a letter addressed to customers and seen by PrintWeek, the trust said it had no option but to downsize the Frogmore Mill operation, due to the collapse of the property market and the inability to sell surplus development land that was to pay for the ongoing programme.

Jacky Bennett, chief executive of The Paper Trail, said: "Progress had been good up until 2008 when the credit crunch and recession hit. We had plans to sell some underdeveloped land but then its value dropped dramatically."

She added that the charity had planned to develop the mill to ensure its sustainability.

"Now we have had no choice but to cut our costs. However, we are feeling optimistic that the land could be sold in the future," she said.

The machine produces five to six tonnes per day, but in the short term, a small 1902 paper machine gifted from Bury College will be revived and produce small quantities of paper at the site.

A campaign was launched last November in order to raise funds to support the continuation of the mill.