The British Museum is cutting 150 jobs after being warned that it could face of a deficit of £5m in three years if it does not reduce costs.

The London museum says it hopes its "core values" of free access and maintaining collections will not be cut back in the run up to its 250th anniversary year in 2003.

We are determined that our five million visitors can continue to enjoy inspiring and educational visits

Christopher Jones British Museum

It is hoped that the job losses - 7% of the total staff - will come through voluntary redundancies and retirements, but the museum says some compulsory redundancies may be necessary.

The museum is a national institution, housing everything from the Elgin Marbles to Japanese antiquities, and £106m was recently spent on redeveloping its Great Court.

But recent efficiency drives have not saved enough money to stop the job losses, the museum's accounting officer, Christopher Jones, said.

"We greatly regret the inevitable effects of the cost reduction on our staff, who are being fully briefed," he said.

The museum celebrates its 250th anniversary in 2003

"We are determined that our five million visitors can continue to enjoy inspiring and educational visits."

Increased visitor numbers, a tourism slump after 11 September and a reduction in government funding have been blamed.

The amount of money the institution gets from the government has been reduced in real terms by 30% over the last 10 years, the museum has said.

It does not charge visitors for entry, so relies on government funding, donations and revenue from things like shops and cafes.

The museum houses the controversial Elgin Marbles

The move comes despite a two-year sponsorship deal with Barclays bank, which started in 2001.

The museum had already halted plans for an £80m study centre, put a freeze on recruitment and sliced £1m from its building maintenance budget.

The job losses will be phased over the next two years, the museum said.

The Public and Commercial Services Union said the government should "recognise its responsibilities for the upkeep of one of this country's great institutions".

The Prospect union said it feared the cuts would mean fewer new exhibitions, more gallery closures and fewer resources for schoolchildren.

The museum is also planning a string of celebrations for its 250th anniversary in June 2003.