The company says the cuts are partly a result of the impact on sales of the end of European Union duty free earlier this year.

BAT is closing its factory at Spennymoor, County Durham, next year - laying off 440 workers.

A further 70 jobs will go at its Southampton plant.

Union 'warned of impact of advertising ban'

The announcement comes just a week after BAT announced profits had risen 26% to £1.2bn in the first nine months of the year - partly due to a merger with Rothmans in June.

There will also be cuts at its site in Darlington and an engineering workshop in Milton Keynes is to close.

BAT has been reviewing its UK operations since its merger with Rothamans, who formerly owned the Spennymoor plant.

It told workers on Tuesday that a fall in demand for tobacco worldwide, coupled with the end of duty-free and the consequent rise in "bootleg" tobacco sales.

Bootlegging is believed to account for 20% of the UK tobacco market.

Tony Cain, BAT's head of manufacturing, said: "The decision to close Spennymoor has been taken with great reluctance.

'Terrible news'

"It has been a high performing factory for Rothmans, and has worked hard and successfully to maintain international competitiveness since production began 20 years ago.

"This is a sad day for many of our people but we will be doing all we can to mitigate the impacts through severence packages, financial advice and outplacement."

He said the cuts would go through voluntary redundancy and redeployment, where possible, but said there would have to be some compulsory redundancies.

The Spennymoor factory makes brands such as Rothmans King Size, Dunhill International and Peter Stuyvesant.

Mike Mulhearn, of the Manufacturing Science and Finance Union, said: "This is terrible news for the workers at Spennymoor.

"We will make every effort to minimise the damage this closure will cause to individuals and the local community."

He said the union had warned ministers that the end of duty free and restrictions on advertising would mean job losses.

Mr Mulhearn said: "Sadly, it seems this warning was not taken seriously."