The option is one of two that are currently being considered by the Bank of England due to concerns that the plant is operating well below capacity. Output has halved since the 1950s and staffing has fallen by 1,500 over the past decade.

"We have only one major customer, the Bank of England, but we cannot make notes that the bank does not need," said a Bank of England spokesman.

In an open letter to all staff, DSP managing director Mike Thompson said the two options were: that the printing works remains under its present ownership and is restricted in the outside work it can take on; or that the operations are transferred to a private-sector company, which would operate under contract to supply banknotes over a period of years, but would also be free to take on outside work. De La Rue would be an obvious candidate to take on the plant.

The letter stresses that under both options, Bank of England notes will continue to be printed at Debden.

The GPMU has expressed concerns over the future of the site and the jobs of 250 of its members. "There will be a period of consultation over the next few months, but we want Debden to remain an integral part of the Bank," said national officer Chris Harding.

He said the word privatisation had been mentioned, and that the union was seeking a meeting with directors of the Bank for clarification on the plants future.

"They have said they will keep us informed, but once you let the privatisation genie out of its bottle, its difficult to get it back in," Harding said.

The Bank of England has issued banknotes since it was founded in 1694. All English banknotes are printed at the DSP plant in Loughton, Essex.

DSP is wholly owned by the Bank of England and employs 450 staff.

Story by Andy Scott