The Ministry of Defence has confirmed it is considering plans to withdraw naval protection from the Falkland Islands.

Officials have indicated that a recall of the Royal Navy's South Atlantic patrol is one of a number of cost-cutting options under consideration.

The plan, if initiated, could see the Navy's presence, which has been ongoing since the Falklands conflict of 1982, whittled down to its ice-breaker HMS Endurance.

An MoD spokesman refused to deny the plans had been put forward, but said: "Ministers have made no decisions."

The Navy is known to be suffering from a cash crisis caused by soaring fuel prices and a sudden rise in demands for its services.

Last month it was revealed that naval exercises were having to be cancelled to save money.

Further reports that plans are afoot to mothball a Navy aircraft carrier and three frigates remain unconfirmed.