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At least 250 jobs are to be axed in a shake-up of the assembly government's department for the economy.

The move will reduce the workforce by around a quarter, taking civil servant numbers to around 890.

Sources say the reductions will be mainly by early retirement, voluntary redundancy and departmenal transfers.

The assembly government said the restructuring would support the economic renewal programme outlined by the Deputy First Minister recently.

The announcement is not directly linked to the UK government's spending cuts but unions say they are concerned about the size of the reductions.

It follows a review published earlier in the month, the economic renewal programme, which outlined a major change in the approach to how the assembly government's economic development budget should be spent.

That included getting rid of grants to business and focusing support on six key sectors.

The reduction in jobs could increase to 300 depending on the outcome of a review into the technium programme, which provides support to new science and technology businesses.

Further reductions in staffing are being anticipated across all assembly government departments in the future once the Treasury decides on its spending levels.

The Public and Commercial Services Union (PCS), which represents many rank and file civil servants, expressed concern about the assembly government's plans.

A PCS spokesperson said: "We are concerned about the sheer scale of the cuts and the likely effects on workload and work-life balance for staff.

"We will be meeting with [assembly government] management shortly to improve opportunities for displaced staff across all of Wales, especially in areas where there is little alternative work at this moment, particularly at the more senior levels."

The spokesperson added that the union acknowledged that the assembly government's redeployment efforts since the mergers of quangos in 2006 had been successful.

An assembly government spokesperson said the current restructuring was to support the economic renewal programme set out by Deputy First Minister Ieuan Wyn Jones two weeks ago.

The spokesperson said: "This will result in a reduction in the number of posts within the economy and transport department.

"We will not know the actual number of reductions until we complete consultation with our staff and trades unions but initial draft structures indicate that this is likely to be in the vicinity of 250 and 300 posts.

"We already have in place a number of schemes to manage the change including voluntary severance, early retirement and internal recruitment and redeployment to vacant posts across the Welsh Assembly Government."

CBI Wales director David Rosser said the announcement was an inevitable consequence of the assembly government's decision to take a less interventionist approach to economic growth.

He said: "A less interventionist approach will require less staff. Leaner times for both the public and private sectors in Wales mean tough decisions have to be made.

"We have every sympathy with the affected members of staff. I'm sure the assembly government, like any good employer, will do whatever it can to help the affected individuals find alternative employment."