Historic Axminster Carpets - founded in 1755 - will axe around 300 of its 450 jobs, administrators Duff & Phelps have confirmed.
The board of the 250-year-old company, which started in the same year that Samuel Johnson's famous Dictionary of the English Language was first published, said on Tuesday that it had been forced to take the decision in order to save the company from being liquidated.
A statement issued by the administrators, said: 'The board of the company has taken the decision to place the company into administration following a sharp increase in raw material prices, the closure of a loss-making subsidiary and a slight downturn in sales as a result of the continuing economic difficulties facing the UK.
'The administrators continue to assess the company's financial position and explore all potential options to maximise the realisations for the company's creditors including a sale of the business.
'However, while this assessment takes place, the decision has been taken to downscale the carpet manufacturing operations and cease yarn production.
'Consequently, the joint administrators have had no alternative other than to make approximately 300 employees redundant at the Axminster and Buckfast sites.'
It said some 100 employees had been retained by the administrators and the factory outlet stores would remain open for business as usual while the company would try to fulfil all existing customer orders.
'The main suppliers have already offered their continued support for the business during the administration,' it added.
The company was granted a five-year royal warrant in January 2012 and its designs are sold in John Lewis and Carpetright as well as numerous specialist commissions that grace scores of historic houses.
It is one of Devon's largest employers and news of its precarious position prompted over 6,000 people to sign a petition urging it to be saved.
Axminster director Joshua Dutfield said: 'Trading has been difficult and although it saddens the board to make the decision to enter administration it could not be avoided.
'The management have been working with key suppliers, creditors and lenders to resolve the company's financial difficulties and whilst the last few weeks have been stressful, the company managed to pay the wages yesterday.
'We are now committed to working with the administrators to assess all viable options for the future of the business and achieve the best possible outcome for all concerned and most importantly the staff.'
Late last month, Benjamin Wiles, Geoff Bouchier and David Whitehouse of Duff & Phelps were appointed joint administrators to the East Devon carpet maker and supplier.