Businesses which break the law face fines of £5,000.

But nearly 60% of firms questioned in a recent survey for the BBC said they were not aware of the legislation.

The report also found that only 45% said they would be ready to comply with the new regulations in time.

Restaurateur Anthony Worrall Thompson told the BBC: "The regulations are all very well in principle, consumers should be given a choice, but in they have not been thought through.

"How are they going to police this law? Councils do not have enough staff.

"And there is no difference in taste. Customers will not know they have eating GM food unless they grow a third ear in 20 years' time."

The BBC's Rachel Payne reports on the new regulations

Several of Britain's biggest fast-food chains say they have already removed GM ingredients from their menus in time for the introduction of new labelling laws.

Friends of the Earth (FoE) surveyed 11 leading chains and found all said they did not use GM soya or maize.

But FoE says a "loophole in the legislation" means food outlets can supply meals which contain GM derivatives, such as GM lecithin and GM soya oil, without having to tell customers.

Supermarkets are removing GM products

Two of the companies surveyed - Prêt à Manger and Domino's Pizza - said they had removed GM derivatives while a further six said they were removing them.

But Pete Riley, senior food campaigner at FoE, said: "Restaurants might well ask why they have to go to all the trouble and expense to ensure that their meals don't contain ingredients that neither they nor their customers want.

"Surely the bill should be picked up by the big biotech companies who stand to make vast sums of money from this new technology."

Several major supermarket chains, including Sainsbury's and Marks and Spencer, are removing all GM ingredients from own-brand ranges.

Their decisions follow that of frozen food retailer Iceland, which announced that none of its own-label produce would contain GM ingredients in April 1998.

McDonald's, Perfect Pizza, KFC, Pizza Hut and City Centre Restaurants (which includes Cafe Uno and Deep Pan Pizza) said they were removing GM derivatives.

Wimpy said it would be free of the derivatives by the end of the year while Burger King and Granada said they were monitoring and reviewing the situation.