Woolworths went into administration last night, putting thousands of high street jobs at risk despite last-ditch government efforts to save it.

The retail chain, which opened its first British shop almost 100 years ago, has debts of £385 million. Its 800 outlets will open as usual today, but many are expected to shut for good after Christmas.

The decision to call in the administrators was taken despite the intervention of ministers anxious to save the jobs of almost 30,000 people who work for Woolworths.

Baroness Vadera, a minister at the Department for Business, Enterprise and Regulatory Reform, the department run by Lord Mandelson, called Woolworths’ banks on Tuesday night to order them back to the negotiating table to try to stave off collapse.

GMAC, the financial arm of General Motors, and Burdale, a division of the Bank of Ireland, which were leading negotiations with Woolworths on behalf of eight lenders, was contacted. Lady Vadera also spoke to Barclays, another lender, in an attempt to keep stores open over the crucial Christmas trading period.

Elsewhere on the high street, MFI, the kitchens and furniture retailer, also called in administrators. The company has 100 stores and employs 1,000 people. Many other retailers are struggling to stay afloat, heavily discounting stock to entice consumers before Christmas. Price cuts of up to 40 per cent are widely available in many shops.

The administration of Woolworths includes its shops and EUK, a DVD distribution business. A joint venture with the BBC called 2Entertain, that sells DVDs such as Blue Planet, is not in administration.

Concerns were mounting among music, film and games companies, all of whom rely on Woolworths’ Entertainment UK arm to get CDs, DVDs and games into Asda, Sainsbury’s, Zavvi (formerly Virgin Megastores) and Woolworths itself.

Deliveries collapsed yesterday, hitting the entertainment sector when it is critical to get products into shops.

About half of all music and film sales are conducted in the final six weeks before Christmas, although it is expected that the big supermarkets will find a way of resuming deliveries quickly, possibly using other suppliers.

Woolworths pensioners also stand to lose out. The group’s pension fund had a £100 million deficit. Woolworths has agreed to pay £50 million to trustees of the scheme as part of the sale of 2Entertain to the BBC, for about £100 million. Pensioners and current employees of the two collapsed businesses will now have to stand in line with other creditors.

The Woolworths board faces legal action from the company’s leading shareholder. Ardeshir Naghshineh, who owns 10 per cent of Woolworths and will lose millions of pounds in the collapse, sent an e-mail to its board on Tuesday saying that he would take them to court if they put the business into administration.

Mr Naghshineh believed that Woolworths’ retail arm was worth much more than £1, the price at which it had been proposed to sell it, despite its debt mountain.

Mr Naghshineh declined to comment on the potential legal action, but said yesterday: “I am deeply disappointed that the company has gone into administration. I am also deeply disappointed that the Woolworths board was not prepared to enter meaningful discussions with us.”

Alan Duncan, the Shadow Business Secretary, called on the Government to change Britain’s insolvency regime to help companies such as Woolworths to survive for longer: “Thousands of people who work for Woolworths will today be worried about their jobs and families.”

The Times revealed last Wednesday that Woolworths was in crunch talks to sell its retail arm to Hilco, an investment fund, for just £1.

Woolworths has been loss-making for years. The retailer’s own two leading lenders are struggling under the weight of the global financial crisis.

Woolworth’s management, which started talks with Hilco last month, believed that a sale of its retail outlets was the only way it could keep the business solvent.

Steve Johnson, chief executive, who ran the DIY chain Focus, which was bought for £1 by a US hedge fund last year, had been worried for more than a week that Woolworths’ directors would soon break the law by trading without being able to pay creditors.

Others in trouble

MFI Britain’s biggest furniture retailer collapsed into administration last night for the second time in two months – putting more than 1,000 jobs at risk. About 26 stores will close immediately with the loss of about 260 jobs

M&S Marks & Spencer is thought to be planning at least two more “20 per cent off” sale days – December 4 and 11. Its first last week had queues at the tills in some areas – although many people were just window shopping

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