Firm that does dirty work for No 10 is clean out of luck

The washing of Downing Street's dirty linen will soon be done elsewhere. Not the kind dealt with so effortlessly by spin-doctors - the gossip, rumours and hidden scandals - but the shirts, sheets and socks destined for the spin-drier.

After 18 years' service, the laundry which has cleaned up all Number 10 can throw at it, including perhaps John Major's legendary inside-out underpants, faces closure.

The building where Esher and Royal Windsor Laundry is based in Kingston, Surrey, is to be demolished for flats and the 90-year-old firm doubts it can afford new premises.

The managing director, Jane Hornsby, who took over from her father, Herbert Davis, said: "We are looking for new premises, though now I do not think we will be able to find them. We could have to close the whole thing."

At stake are 60 jobs, a contract with Number 10 and London hotels, and clients such as the actress Hayley Mills and the actor Peter Sallis, voice of Wallace in the Wallace and Gromit animation.

The Number 10 contract came through one of the firm's regular private clients then living in Flood Street, Chelsea -one Mrs M Thatcher. When she moved to her new job in 1979, Mr Davis received a call asking if he would take on the cleaning at Number 10. "He was very chuffed," said one employee. "We are all very proud of the contract."

The company also did laundry for Nigel Lawson next door, though the arrangement did not continue when Norman Lamont became chancellor, even though he was the MP for Kingston.

The firm has a royal connection: the Royal Windsor half of the name, product of an earlier takeover, washed the smalls of staff at Windsor Castle. Mrs Hornsby, who declined to discuss the Downing Street deal for security reasons, said they would be doing all they could to continue business for the sake of the firm and its workforce and admitted they had known for some time their lease was ending. They had failed in trying to buy the site themselves. "The problem is that it is very expensive to move a business like ours.

Councillors on the Kingston Town Neighbourhood Committee have given outline permission for the developers Picton Estates to build 16 two-bedroom flats and four one-bedroom flats. Committee chairman John Tilley said they sympathised with the workforce's plight and would "leave no stone unturned" helping find an alternative site.

A spokeswoman for Picton said they were in no hurry to develop the plot: "It's very sad when a business is dying. We offered them two years, but they did not sign."