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More than 2,000 jobs will be lost over the next three years after Northern Rock confirmed plans to cut a third of its staff.

The job cuts come as a part of Northern Rock's new government appointed executive chairman Ron Sandler's plan to reduce the size of the nationalised lender.

Customers coming to the end of fixed-rate mortgage deals are also being urged to look elsewhere to remortgage by Northern Rock as the bank looks to reduce the size of its assets.

Mr Sandler said: "This will be a robust plan to create a smaller mortgage and savings bank that will be tightly focused and financially viable.

"It will be a demanding plan, and one that will carry a number of financial and operational risks."

He added the future success of his plan, and therefore Northern Rock, would face challenges if there is a protracted downturn in the housing market.

Graham Goddard, general secretary of the union Unite, said: "The employees of the bank have already faced months of insecurity and anxiety about their future.

"News that staff numbers will be reduced as part of the restructuring plans for Northern Rock will cause further uncertainty for the workforce."

He added the union would be pressuring Northern Rock to for detailed plans of the restructuring and will oppose any compulsory redundancies.

James Ramsbotham, executive chairman of the North East Chamber of Commerce (NECC), called on people in the north-east to continue their support for Northern Rock.

"This was clearly a difficult, if not wholly unexpected, outcome of the review of operations at Northern Rock," he said.

"While it is disappointing to have these job losses there are many vacancies that currently exist in the skill areas of those most likely to be affected. Skilled and motivated workers such as these will be in high demand."

He concluded: "The more the north-east supports Northern Rock now, the more Northern Rock can support the region in the future."