Russian car giant Avtovaz, which makes the Lada model, plans to cut around 27,700 jobs amidst plummeting demand for its cars, the Interfax news agency reported on Monday.

Interfax said Avtovaz vice president Igor Komarov announced the plan to cut 27,691 jobs at a meeting with suppliers attended by the governor of the region.

Avtovaz currently employs 110,000 workers and the job losses would be among the biggest at a single company in Russia in the ongoing economic crisis.

Avtovaz, which fell to 24.7 billion rubles (563 million euros, $799 million) net loss last year after a profit of 3.7 billion rubles in 2007, has already planned to cut production in August - its second such move this year.

The Russian government had, in late March, offered to provide the struggling auto firm with a loan of 25 billion rubles.

Avtovaz, which is 25 per cent owned by French carmaker Renault, is a Soviet-era firm and one of the least efficient in the industry.

The falling output at the car firm has affected steel mills, tractor plants, mines and construction sites across Russia and pushed up unemployment levels in Russia.

For Avtovaz, propped up with a $750 million interest-free loan from the government, the lay offs are the first steps of more sweeping changes at the factory and the industry as a whole.

Avtovaz, which had 120,000 Ladas in storage as of January this year, limited production drastically to 332,000 units in 2009 against the established capacity of 1,000,000 cars a year.

In the first six months of the year, the company sold 180,000 cars, including 40,000 from its inventory.