In its monthly assessment of the sector, the British Retail Consortium revealed that like-for-like sales, which strip out new stores and space, slumped 3.3 per cent in December from the previous year.

Total sales, which includes the additional space, fell by 1.4 per cent. The like-for-like decrease was the seventh in a row while the total fall was the third.

The consortium said that by both measures, this was the worst December since the survey began 14 years ago and barring distortions associated with the timing of Easter, the worst performance during that period. Only food and footwear stores reported sales up on the previous year.

'These are truly dreadful numbers,' said Mr Stephen Roberston, the consortium's director-general.

December's figures augur badly for retailers as sales during the month are key for earnings.

Even with heavy discounting, consumers remained reluctant to part with their cash amid mounting unemployment fears and heightened personal debt levels.

With general retailer Woolworths already having closed its doors for good and others, such as tea and coffee merchant Whittard of Chelsea and Land of Leather filing for bankruptcy protection, there are mounting fears that Britain's economic retrenchment will claim further victims, especially if December sales disappoint.

The problems afflicting Britain's consumer sector were further highlighted in the monthly housing survey from the Royal Institution of Chartered Surveyors, or RICS.

In its report, RICS found that the average number of home sales per chartered surveyor in England and Wales fell to a record low of 10.1 during December despite another big interest rate cut from the Bank of England.

Despite the ongoing sales decline, RICS noted that buyer interest may be returning to the market, albeit slowly.

'Buyer interest is now at levels not seen since 2006 but without mortgage finance the housing market is at a standstill and transaction levels at an all time low,' RICS spokesman Ian Perry said.

Mr Perry said the British government should provide guarantees for the new issuance of residential mortgage-backed securities.

'Without this help there is a real danger that homebuyers will be frozen out of the market, transaction levels and prices will fall to new lows, repossessions will increase and negative equity will become common place,' he said.

RICS also revealed that prices continued to drop during the month, though at a moderately easier pace. It said 73 per cent more chartered surveyors indicated a fall than a rise in house prices in December, slightly better than November's 76 per cent. -- AP