The revolutionary step was backed by 97.5% of the members that voted at an extraordinary general meeting of the derivatives exchange on Tuesday.

The plans come in response to fierce competition from its German rival, the Frankfurt-based Deutsche Terminboerse (DTB).

Liffe has seen its position as Europe's leading derivatives market eroded.

Daniel Hodson, Liffe's chief executive, said: "It was an oustanding result. It underscores the courage of the board in putting forth these proposals which to some degree were criticised to begin with."

Chief Executive of Liffe Daniel Hodson

Members were almost certain to vote for electronic trading - a move seen as the only way to fight the stiff competition.

But dissatisfaction with the pace and depth of reforms at the embattled exchange is widespread.

Chief Executive of Liffe Daniel Hodson: 'It isn't the end of the floor.'

"The direction is right, but it's a matter of whether it's being done quickly enough, and I think it isn't," said a managing director of a large trading house.

"There's a fair undercurrent of dissatisfaction, but one has to vote for the proposals or Liffe will be pushed back even more."

The exchange's 215 members were asked to vote on a 24-page document, entitled "Liffe's Strategic Direction - the board's proposals", in its entirety with no amendments.

The document sets out plans for developing an automated trading system for financial futures alongside Liffe's "open-outcry" floor in the second quarter of 1999.

It also calls for revamping the membership structure to allow non-shareholders to gain access to the planned electronic platform, and operating the exchange on a profit-oriented basis.

In theory, a "no" vote could have meant Liffe's plan to go electronic would have ground to a halt.

Germans winning trade battle

Electronic trading, considered cheaper and more efficient than pit trading, has been a source of debate and anxiety at Liffe over the past few months as it gears up for the introduction of a single currency in Europe.

Fierce competition from rival DTB prompted Liffe to announce in March it would also go electronic.

Liffe has to evolve to survive

Even so, Liffe has lost the lion's share of business in the high-profile 10-year German bond (Bund) contract in the past several months, although it maintains dominance in short-term interest rate futures.

The humiliation deepened last week when the DTB - previously considered a junior upstart - announced it had surpassed Liffe in total traded volume in May.

Some members fear Liffe will be unable to make up lost ground and risks losing more in the months running up to the introduction of a new electronic platform.

Conversely floor traders are already mourning the loss of the floor, where trading volumes are expected to dwindle after the onset of the electronic trading system.

But last week Daniel Hodson insisted the exchange's position was not under threat.

Risky business

Liffe is an exchange where people trade financial risk.

Those who do not want to take financial risks transfer them to people who have the appetite for them and the ability to control them.

Because of Liffe's market place, banks and other financial institutions can offer fixed rate mortgages to homeowners, and companies can protect investment programmes from the danger that higher interest rates might make them unprofitable.

The demand for these financial products, known as derivatives, has been growing rapidly, in response to the growing instability in financial markets.

Liffe has grown by over 40% a year since it was founded in 1982. It earns £1,000m in invisible earnings for Britain and provides 25,000 jobs.