The government is working to ensure that Woolworths stores remain open over the Christmas period, Prime Minister Gordon Brown has said.
He said arrangements had been discussed to ensure staff would still be paid and employees threatened with redundancy would be helped to find work.
Administrators were appointed to the struggling chain on Wednesday.
Woolworths was dealt a further blow when lottery operator Camelot stopped selling tickets through its shops.
Camelot said it had suspended trading with Woolworths with immediate effect, "pending the company finding a satisfactory resolution to its current trading difficulties" .
The decision means that Woolworths will no longer be able to sell National Lottery tickets and scratchcards, or process prize claims.
Although the stores will stay open until after Christmas there is still concern over the future of Woolworths' 30,000-strong workforce.
The prime minister said: "The important thing is in the long-run that employees in this company - where the businesses and the shops are not going to stay open in the longer term - can get other jobs quickly.
"That's why we're going to move in immediately to give advice to employees in the company."
Accountancy firm Deloitte, who have been appointed as administrator, said the search was on for a suitable buyer for Woolworths' stores and the Entertainment UK business, which supplies DVDs to supermarket groups.
WHAT IS ADMINISTRATION?
A rescue mechanism for UK companies in severe trouble. It allows them to continue as a going concern, under supervision, effectively to try to trade out of difficulty.
Its problems were compounded in the past couple of months when it was forced to pay cash when buying goods from suppliers, because trade credit insurers were no longer prepared to insure suppliers to Woolworths.
Robert Peston said that Woolworths had been one of the UK's weakest retailers for years.
But the sudden deterioration in the real economy and financial markets had triggered its demise.
"It's the suddenness of how everything turned bad that shocks and this means Woolies will not be the last casualty," he said.
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