Britain's computer games industry has given warning that it could wither and die if the 10,000 people who develop the games - including the makers of Grand Theft Auto - are not supported with tax breaks and relevant degree courses.

A group of executives this week launched Games Up?, a campaign demanding that ministers do more to help an industry that has fallen in terms of the numbers employed to fourth place globally, after generous tax breaks helped Canada to vault ahead of Britain in 2006.

The campaign has forced ministers to concede that they are considering introducing tax breaks similar to those available to the film industry, to help to compete with Canada, where developers can get back 40 per cent of the cost of producing a hit game.

Created in Derby, Lara Croft is now produced in California, and while Grand Theft Auto, made in Edinburgh, will be the year's bestselling game - there are few other high-profile hits, and no large British-owned companies left.

Nick Gibson, an industry consultant who is leading the lobbying effort, said: “We've got good government backing for television, and for the film industry, but all ministers do is commentate on the games industry. What's happening is that the UK industry is declining when the global industry is booming.”

High street games sales grew 26per cent to £1.7 billion last year, as women and older people began to try the virtual life offered by new consoles ranging from the Nintendo Wii to the PlayStation3, but the number of developers employed to meet the greater demand increased only by an estimated 4 per cent in a country that led the way with titles made for Sir Clive Sinclair's ZX Spectrum.

As the frustration of the industry has mounted, a group of young programmers put a petition on the Downing Street website earlier this year. No 10 responded last week, saying that officials were “working with the UK industry to collect and review the evidence for introducing such a credit in the UK”.

Meanwhile, the Games Up? campaigners are hoping to persuade ministers to agree to the creation of a games academy along the lines of the London Film School. They say there are too few well-qualified graduates being produced by the 81 university courses on computer games development.

Ian Livingstone, creative director of Eidos, which makes Lara Croft, said: “Only four of those courses are accredited as good enough - the rest are dumbed-down courses producing people who can only design a game.”

Philip Oliver, founder of Blitz, one of the UK's largest independent games developers, said: “We're seeing a massive skills gap. There's a general lack of students studying the sciences, including computer science. Programming is no longer an element of GCSE IT - it's been consigned to A-level and too late.”

Codemasters, the British-based maker of the Colin McRae rally series, is typical of the unhappy games makers threatenting to move production abroad. Chris Deering, chairman, said: “We employ 500 people in the UK, but if we want to grow further we might have to take advantage of the incentives offered by other countries.”

SCi Entertainment, the Wimbledon-based parent of Eidos, is cutting jobs in Britain, but expanding in Montreal, where is has moved the development of action game Deus Ex from its previous location in America. Mr Livingstone said: “You can argue that was a missed opportunity for the UK.”

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