Fixed-odds betting terminals will have their maximum stakes limited to £2 in a crackdown on harm caused by excessive gambling, the government announced today.

Civil society minister Tracey Crouch, who is MP for Chatham and Aylesford, said the machines were being curtailed to "stop extreme losses by those who can least afford it".

The betting terminals, previously described as the "crack cocaine of gambling", have been controversial for the huge losses that can be built up in a short space of time.

Stakes of up to £100 could be placed every 20 seconds.

However, the move has prompted criticism from gambling companies, which have claimed the move puts thousands of jobs and hundreds of betting shops at risk.

Miss Crouch said: "Problem gambling can devastate individuals’ lives, families and communities. It is right that we take decisive action now to ensure a responsible gambling industry that protects the most vulnerable in our society.

"By reducing FOBT stakes to £2 we can help stop extreme losses by those who can least afford it.

"While we want a healthy gambling industry that contributes to the economy, we also need one that does all it can to protect players.

"We are increasing protections around online gambling, doing more on research, education and treatment of problem gambling and ensuring tighter rules around gambling advertising.

"We will work with the industry on the impact of these changes and are confident that this innovative sector will step up and help achieve this balance."

The move comes after a public consultation and advice from the Gambling Commission.

The government's announcement was welcomed by Cllr Vince Maple, Medway Labour Group leader and a long-time campaigner against fixed-odds betting terminals.

He said: "I've have heard first hand too many stories of individuals who have lost their jobs, their homes, their families and tragically in some cases their lives.

"Individuals who work in the bookmaking shops in Medway have spoken to me privately to say these machines are a blight on their industry.

"It is also welcome to see that Public Health England will be looking into gambling related harm which simply doesn't have the support it currently needs.

"As I have said at all points of this campaign, I am not anti gambling but I am anti problem gambling and I firmly believe these changes will help reduce problem gambling."

Changes to the stake will need to be brought through leglislation and will need to be approved by parliament.

GVC Holdings, the owner of bookmakers Ladbrokes and Coral, estimated it will take a £160 million hit on its earnings in the first year after the changes are implemented.

A spokesman said: "It is now important that the industry is given an adequate implementation period to help prepare and plan for the shop closures that will arise, including attempting to mitigate the impact of resultant job losses."

William Hill said 70% of its gambling machine revenue in the first four months of the current financial year came from stakes of more than £2.

Chief executive Philip Bowcock said: "The Government has handed us a tough challenge today and it will take some time for the full impact to be understood, for our business, the wider high street and key partners like horseracing.

"We will continue to evolve our retail business in order to adapt to this change and we will support our colleagues as best we can."