Fears that Winchester could become nothing more than a dormitory town with fewer home-grown jobs have been sparked again by the latest plans to convert city centre offices into homes.

business bosses warn that if the loss of work premises continues at its current rate it will have a major impact on the city's economy.

Council chiefs say that 14,000 square metres of office space have already been lost and been replaced by 110 homes over a seven-year-period up to 2001.

Now the Kingfisher Housing Association has won planning permission to convert Wyeth House, in Hyde Street, into 14 flats.

Barbara Bryant, chief executive of the Chamber of Commerce, said: "The chamber has consistently for many years expressed concern that the city's employment base, both in size and variety, is diminishing.

"It is not diminishing naturally. Its growth has been restricted.

"It is wider than just Wyeth House. You need to have people living, working and playing in the town and that means expanding employment opportunities and you cannot do that without expanding premises for businesses."

Said Lib Dem councillor, Sue Nelmes: "I'm really unhappy about all the offices we are losing. We will end up a dormitory town without employment. I object strongly to the trend in the city to change offices into living accommodation."

But Labour group leader, Patrick Davies, said: "There's still an enormous amount of office employment in the city and the economy thrives on that. Overall, the balance is right and we ought to go on developing housing in the city centre."

Housing bosses aim to convert Wyeth House, a three-storey red brick building, into seven one bedroom and seven two-bedroom flats to put up for market rent. But they have said that if they get help from the city council, they may be able to ensure some affordable housing as part of the scheme.