P&O Ferries has sacked 800 UK crew members with immediate effect.
The company ordered all of its vessels to return to the dock ahead of a company-wide announcement today (17 March).
In a post to Twitter, it announced that 'P&O will not be running' and was 'advising travellers of alternative arrangements'.
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After hearing of the job losses, some staff, however, have refused to leave their ships for fear of being 'locked out'.
In a statement, the parent company, DP World, said the decision was taken for the sake of its future.
A spokesperson for the firm said: "P&O Ferries plays a critical role in keeping trade flowing, supply chains moving, and connecting families and friends across the North and Irish seas and the English Channel.
"We have been at the heart of this service for years and we are committed to serving these vital routes.
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"However, in its current state, P&O Ferries is not a viable business. We have made a £100m loss year on year, which has been covered by our parent DP World.
"This is not sustainable. Our survival is dependent on making swift and significant changes now. Without these changes there is no future for P&O Ferries.
"These circumstances have resulted in a very difficult but necessary decision, which was only taken after seriously considering all the available options.
"As part of the process we are starting today, we are providing 800 seafarers with immediate severance notices and will be compensating them for this lack of advance notice with enhanced compensation packages."
However, union bosses have told their members to remain onboard the ferries, slamming the move and saying they will 'fight'.
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Speaking about the mass redundancies, a spokesperson for the National Union of Rail, Maritime and Transport Workers (RMT) said: "We have instructed our members to remain onboard and are demanding our members across P&O's UK operations are protected and the Secretary of State intervenes to save seafarers from the dole queue.
"We are digging in for the long-haul.
"We are determined to fight."
Transport Secretary Grant Shapps said he was worried by the news and would be in contact with the company.
He wrote in a tweet: "I am very concerned about the news from P&O Ferries this morning and we will be speaking to the company today to understand the impact on workers and passengers.
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"Important to note other operators continue to run cross Channel routes, so passengers and goods can flow, but I am working with the Kent Resilience Forum to minimise disruption."
Dominic Smithers