Hundreds of jobs could go at Ethel Austin after the discount fashion chain last night became the latest high street retailer to go into administration.

Sources told The Times that a rescue deal for the “lump” of Ethel Austin's 300 stores could be announced as early as today, with Elaine Gray, a former executive at MK One, the rival fashion chain, the most likely buyer.

However, it is thought that a large proportion of Ethel Austin's 2,800 staff could be laid off. One industry expert said: “There will be big job losses.”

The move came as it emerged that MK One has been put up for sale by Baugur, the Icelandic investment giant, in one of its first disposals since breaking into the British market six years ago. MK One dived £17.4 million into the red last year and there has been mounting speculation over its financial health in recent weeks.

MK One and Ethel Austin have struggled amid fierce competition from Primark and a recent resurgence by the privately owned Peacocks.

Philip Duffy, a partner at Menzies Corporate Restructuring, said that his aim was to keep Ethel Austin trading until a buyer could be found. He added: “We appreciate that this is a worrying time for staff and are therefore keen to keep them informed of progress.”

The British Retail Consortium said yesterday that the clothing sector had suffered its worst month for eight years in March. Hennes & Mauritz revealed yesterday that worldwide sales had fallen 8 per cent last month.

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