The firm is consulting employees over the cutbacks among its 6,700 staff under an overhaul of the business.

The news comes a day after rival Taylor Wimpey announced plans to shed 900 staff and close 13 offices.

The job cuts will fall on building sites and in sales, administration and support as the firm shrinks the business to meet the tougher market conditions.

A Barratt spokesman said: "Our number one priority is to ensure that Barratt's core skills are retained."

Barratt has been under pressure since the takeover of rival Wilson Bowden last year at the top of the market.

The firm's share price has since slumped and it has been relegated from the FTSE 100 Index, but it is currently burdened with around £1.7 billion in debt from the acquisition.

The group is also set to merge eight of its offices into four under the reorganisation plans, which will leave it with 26 regional offices.

The Barratt and David Wilson Homes offices in Leeds and Southampton will be merged, while Aberdeen-based Barratt North Scotland will be combined with Barratt's Edinburgh office.

Barratt's East Midlands office in Chilwell, Nottinghamshire, is to be merged with David Wilson Homes' North Midlands office in Nottingham.

The housing market has been hit as banks stricken by the credit crunch cut back on mortgage lending to would-be buyers.

On Tuesday it was reported that Barratt was close to striking a deal with its lenders to relax banking covenants on debt and gain an extra £400 million to pay off a £600 million short-term loan used in the Wilson Bowden deal, although the company declined to comment.

Yesterday Taylor Wimpey said it had been unable to clinch a refinancing arrangement with its banks so far, and has also written off £550 million from the value of its UK landbanks and work in progress as the market falls.