It is feared the team could close within weeks
Staff at Honda in Brackley, Northamptonshire, have been warned they face redundancy after news the Formula One team has been put up for sale.
They have been told they will receive a letter before Christmas confirming they should expect to be made redundant.
The total number of staff in the UK is around 800 and up to 200 others work for the team indirectly.
The Honda Motor Company said it was pulling out of Formula One because of the world financial crisis.
Chief executive Takeo Fukui said that difficult business conditions had led to the decision to pull out of Formula One racing.
The company also said it has no plans to continue as a supplier of engines for Formula One cars.
Team bosses Ross Brawn and Nick Fry fear Honda could close the Brackley-based team within weeks, according to the Reuters news agency.
It is believed the team have enough money to continue to March, but have set a deadline of the end of January to find a buyer.
Honda will assume the existing debts, and, it is understood, will sell the team for a nominal figure - perhaps as little as £1, said BBC sport correspondent Adam Parsons.
Honda have won only one race in the past three seasons and last year achieved only one podium position thanks to Rubens Barrichello.
Jenson Button is the other driver in the team.
The team's total budget for the past year, including work done in Britain and Japan, is believed to be just short of $500m.
Adam Parsons said this was "a stunning shock" for motor racing.
He said Honda was considered one of the best funded and most dedicated teams, despite its poor results.