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Removing subsidies from a disabled workers organisation will destroy thousands of jobs, a union has claimed.

Leicester-based Remploy has about 2,800 staff in 54 factories across the UK and currently gets £63m in funding.

A , which has said its structure is out of date and the money would be better spent elsewhere, has been welcomed by the government.

But the GMB, which represents many of the staff, said changes would close the factories and put people "on the dole".

Remploy was founded in 1945 to offer employment to people with disabilities and makes a wide variety of products including clothing, furniture and electronic components.

Chief executive of disability rights charity RADAR, Liz Sayce, has written a report which recommends concentrating funding on individuals through the existing Access to Work programme.

It said Remploy's system of disabled-only factories was expensive and unpopular. Factories and businesses would be opened up for private firms to run.

Ms Sayce said: "There was a consensus amongst disability organisations that segregated employment is not the right model for the 21st Century.

"There is the potential to help around 35,000 more disabled people through the changes I am recommending, by spending the money we have more effectively and ensuring people who are most disadvantaged get more effective support."

Maria Miller, minister for disabled people, said she was "attracted" by the ideas.

But the GMB has said it will oppose any such changes.

National officer Phil Davies said: "If the minister goes ahead on the basis of the Sayce report, the 54 factories will close and 2,500 disabled workers will lose their jobs and go on the dole.

"The current employment in the 54 factories are real jobs making products for companies like Jaguar and supplying goods to the armed forces."

The report is out for public consultation until October.