The two plants, at Grain in Kent and Killingholme in Lincolnshire, are to be mothballed over the next few days, cutting Powergen's electricity production by about 25%.

The company said it would try to redeploy staff to its remaining five power stations, but admitted that some jobs would go.

The closures come in response to a steep drop in wholesale electricity prices since the government freed up the market last year.

Crunch time

"The situation is simply not sustainable, the market is bust," Powergen chief executive Paul Golby said.

"The current state of the market is a critical issue for generators and one which must be addressed as part of the government's energy policy review."

Earlier this year, the weak wholesale market was cited as one factor in the near-collapse of nuclear power firm British Energy, currently surviving on a controversial £600m ($900m)government loan.

Powergen, owned by German power firm E.on, generates about 8% of the UK's electricity.