Ireland's largest tour operator has decided to withdraw its holidays from travel agents from next January.

Budget Travel said yesterday that from January 1st it would no longer take holiday bookings from independent travel agents. It has written to approximately 600 travel agents around the State notifying them of the decision.

The company also said that "the business relationship is being terminated immediately" with those travel agents who had sold no Budget travel holidays in recent months.

The company said it would rely instead on selling direct to customers through its website and call centre.

Budget holidays will also be sold through the group's 40-strong chain of stores around the State.

Budget Travel, part of the German travel and shipping giant TUI, accounts for around 40 per cent of the Irish package holiday market - carrying an estimated 400,000 passengers from Ireland last year, according to the company's figures.

Following a path trodden previously by Ryanair, the company last January halved the commission paid to travel agents for selling its holidays to 5 per cent. That sparked a protest from some independent travel agents, which have since refused to sell Budget products.

Budget managing director Eugene Corcoran said yesterday that travel agents had "become part of the problem rather than part of the solution".

However, rival groups Panorama and Airtours, part of Britain's MyTravel plc, said travel agents still had a "vital role to play" in offering holidaymakers best value and advice.

"We have absolutely no plans to follow Budget Travel's proposed plans to stop selling through the 400 or so travel agents nationwide," said managing director Niall McDonnell.

Mr Corcoran said last night that the company's own sales outlets had delivered an "exceptional performance" so far this year.