The cuts will be made at the firm's main regional offices in Newcastle, Manchester and Birmingham.

The company said it hoped to make the cuts through a combination of voluntary redundancies, redeployment and retirement - but did not rule out compulsory redundancies.

Laing's construction division lost £5m in the six months from March, largely on the Millennium Stadium contract.

Sales fall

The loss comes on top of the £26m it lost last year on the project for the stadium - the centrepiece of this year's Rugby World Cup.

Last month, Laing described the project as a "financial disaster", having failed to allow for the cost of unforeseen design changes in its original £121m budget.

I also expects to see sales fall by about a third from last year's total of £1.19bn over the next two to three years.

It said the job cuts would help it save about £7.5m a year.

Laing is also preparing to review its property assets to identify surplus offices which could be sold.

Profit hope

The total cost of restructuring the division is expected to be about £18m - £14m of which will be in redundancy payments.

Chairman Sir Martin Laing said the group needed to be profitable to attract investors at a time of "radical change" for the industry.

He said: "I deeply regret having to make this announcement.

"While it will take up to three years to implement, we will be working hard to achieve most of the downsizing through voluntary redundancy and natural wastage.

"We have a comprehensive programme to communicate the changes to our workforce".

Sir Martin said he was confident the division would be able to make "significant net profits" by 2002.