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14 December 2010
Last updated at 07:43 ET
The government-owned Forensic Science Service, which employs 1,600 people, is to be wound up.
Crime Reduction Minister James Brokenshire said it had been losing about £2m a month and was due to run out of money in January.
The FSS is the largest provider of crime scene evidence for police forces in England and Wales.
It played a key role in the arrest of serial killer Steve Wright and in the case of missing girl Shannon Matthews.
Mr Brokenshire said it would be gradually be broken up, closing completely by March 2012.
In a statement, the FSS said spending cuts meant police forces had less money for forensics consultancy and were increasingly taking such work in-house.
It said it had raised such concerns to the Home Office and was "disappointed" that they had not been addressed before the winding-up decision was made.
Mr Brokenshire said it was vital for the government to take "clear and decisive action" to sort out the FSS after it got into "serious financial difficulty".
In a written statement to MPs, he continued: "The police have advised us that their spend on external forensic suppliers will continue to fall over the next few years as forces seek to maximise efficiencies in this area.
"We have therefore decided to support the wind down of the FSS, transferring or selling off as much of its operations as possible."
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Crime Reduction Minister James Brokenshire said it had been losing about £2m a month and was due to run out of money in January.
The FSS is the largest provider of crime scene evidence for police forces in England and Wales.
It played a key role in the arrest of serial killer Steve Wright and in the case of missing girl Shannon Matthews.
Mr Brokenshire said it would be gradually be broken up, closing completely by March 2012.
In a statement, the FSS said spending cuts meant police forces had less money for forensics consultancy and were increasingly taking such work in-house.
It said it had raised such concerns to the Home Office and was "disappointed" that they had not been addressed before the winding-up decision was made.
Mr Brokenshire said it was vital for the government to take "clear and decisive action" to sort out the FSS after it got into "serious financial difficulty".
In a written statement to MPs, he continued: "The police have advised us that their spend on external forensic suppliers will continue to fall over the next few years as forces seek to maximise efficiencies in this area.
"We have therefore decided to support the wind down of the FSS, transferring or selling off as much of its operations as possible."
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