Steel giant Tata is to axe 1,500 jobs from three of its UK factories, delivering a huge blow to the industry and the country's economic recovery, it has been announced.

The Indian firm said it was proposing to close or mothball part of its Scunthorpe plant, putting at risk 1,200 jobs, as well as cutting 300 jobs at its sites on Teesside.

Tata Steel Europe, formerly Corus, also announced that it will invest £400 million in its Long Products business over the next five years.

Unions said the cuts amounted to 8% of Tata's UK workforce and were a "devastating blow" to the regions affected.

Tata said its Long Products division had made losses over the past two years, citing a decline in some of its major markets, particularly the construction industry.

Demand for structural steel in the UK was only two-thirds of the 2007 level and was not expected to recover fully within the next five years.

Karl-Ulrich Kohler, chief executive of Tata Steel's European operations, said: "We are proposing to take these actions only after going through an inclusive consultative process that involved very careful scrutiny of the Long Products business performance.

"We have used the experience we gained in turning around our speciality steels business in developing this strategy for the rest of long products and we are convinced it represents the best chance of making this business successful and sustainable in the long term.

"Tata steel is showing its commitment to making this strategy work by earmarking £400 million of investment for this business over the next five years. At the same time we are aware that our employees and their families will experience a very unsettling few months as a result of this announcement.

"We will do everything we can to provide them with support and assistance."