More than 500 petrol stations could close this year as smaller forecourts are squeezed out of business by the credit crunch and an escalating supermarket price war.

The Petrol Retailers Association said that more than 2,500 staff were likely to be laid off at filling stations across the UK as the number of forecourts falls below 9,000.

Wm Morrison and Asda both vowed to cut a further 2p off pump prices yesterday, taking unleaded petrol down to 109.9p a litre, in the latest price reduction by supermarkets over the past month.

Ray Holloway, director of the Petrol Retailers Association, said the pressure on many smaller independent operators would prove too much to bear. “Last year the number of sites fell by 260 and I fear there is every likelihood of a significant rise this year. It could double to more than 500,” he said.

Hundreds of petrol stations have seen their sales plunge by more than 10 per cent in recent weeks as supermarkets tempt customers with cheaper prices. Others are suffering from a marked decline in the number of drivers on the road as homeowners cut back on fuel to save money.

Mr Holloway said that, despite record prices at the pump, smaller operators struggled to make much of a profit margin given the intense competition from the grocers.

He added that credit card handling fees charged by the banks had risen in line with the petrol price. He said that forecourts in the North of England appeared to be suffering more than those in the South, with sales declines of 15 per cent in Yorkshire.

The number of petrol forecourts has been in steady decline since the 1960s, when there were nearly 40,000 nationwide. Supermarkets now control about 30 per cent of the market, compared with 11 per cent in 1992.

Mr Holloway said: “The supermarkets appear to want total domination.”

Phil Maud, Morrisons' petrol director, said that the group would continue to cut pump prices when possible to deliver “real value”.

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