About 50 people are employed by Garrard Waters, which operated a distribution centre from the warehouse in Brackmills which is still burning in parts.

Firefighters will be at the scene of the fire in Caswell Road, Northampton, until at least Wednesday morning.

Smoke was still rising from the building on Monday afternoon and the air around Brackmills was thick with the smell of burnt chemicals.

At a meeting, staff were told their jobs were under threat as Garrard Waters' parent company, the Headlam Group, looked at proposals for the future of the business.

Chief executive, Tony Brewer, said: "We announced to the employees that unfortunately we had to enter into a consultation period with them with the possibility of redundancy, given that the building has been destroyed.

"We're talking to staff about having a small-scale service centre with approximately five employees.

"To run a large-scale operation from one of our warehouse distribution centres would take well in excess of a year to build."

A 30-day consultation period is now taking place.

Northamptonshire Fire and Rescue Service incident commander, Ian McDonald, said: "There are carpet materials within the building and they are still burning.

"It's very difficult to get access to the building, so it's a slow process.

"We still have the high-reach appliance around the other side and the operation will probably be ongoing for the next day or so. We have additional welfare facilities in place for firefighters and we will have at least two more nights here."

Garrard Waters representatives met at the site yesterday afternoon to assess whether to pull the building down.

The company's insurers and the Environment Agency are working with the fire brigade as they damp the fire down.