British Steel is to go into official receivership after failing to secure funds for its future, sources said.

It follows last-minute talks held on Tuesday between Unite union and Business Secretary Greg Clark, to urge owner Greybull to find a solution.

Roy Rickhuss, the general secretary of the Community trade union said: “This news will heap more worries on workers and everyone connected with British Steel but it will also end the uncertainty under Greybull’s ownership and must be seized as an opportunity to look for an alternative future.

“It is vital now that cool heads prevail and all parties focus on saving the jobs.

“In these very difficult circumstances we know the workforce will continue to fight for the business as they have done for so many years.

“We would urge the management, contractors, suppliers and customers to support them in that fight for the future.”

Redcar MP, Anna Turley, tweeted: “This is absolutely gutting. So many people have given everything to try & make British Steel a success.

“My thoughts are with everyone at the Beam Mill, Skinningrove & Scunthorpe today. Trying to get more info on implications & next steps.”

Almost 5,000 workers are employed by the company, mainly in Scunthorpe, with another 20,000 employed by firms in the supply chain.

Steve Turner, Unite general secretary, had urged the Government to nationalise the firm if a deal could not be reached to avoid the firm collapsing into administration.

Business Minister Andrew Stephenson told the Commons the Government would do everything it could, within its legal parameters, to support the industry.

Last week it announced that Britain’s second-largest steel producer had the backing of its key stakeholders and that operations would continue as normal.

The company had asked for a package of support to tackle Brexit-related issues.

Overall, more than 150,000 UK steel jobs have been lost since the 1980s, according to a new study by the GMB union, representing workers in the industrial sector.

In 1981 the industry employed 186,000 workers but the total has now slumped to around 32,000.

The GMB said Yorkshire and the Humber has suffered the most job losses – 40,000 -followed by the West Midlands with 25,800.

GMB national officer Ross Murdoch said: “The decline of the UK’s steel industry is devastating to see.

“Consecutive UK governments have failed to protect our proud steel heritage, and now Theresa May is overseeing its demise.”