Construction giant Carillion has said it has "no choice but to take steps to enter into compulsory liquidation with immediate effect" after talks failed to find another way to deal with the company's debts.

The government held talks in attempt to avoid the company going into liquidation but these were unsuccessful.

The firm, which employs 20,000 people in the UK, has debts of £1.15 billion and a pension shortfall of over half a billion.

Due to the high number of government contracts Carillion has, the liquidation process will be handled by the Official Receiver.

Philip Green, chairman of Carillion, said: "This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

"Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

"In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision. We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers."

The Unite union has called for an inquiry into the situation, and Labour will question ministers in the commons on the matter.

Transport secretary Chris Grayling has come under pressure after awarding huge contracts to the company which it was already known it was under pressure.