Kerbside, a non-profit social enterprise firm, based in Luddenden Foot, has been widely praised for offering a recycling service to 25,000 homes across the district since 1998.

It guaranteed jobs only to people out of work.

But it faces closure after yesterday's 11th hour negotiations with French firm Sita, who have won the council's new waste collection contract, failed.

The international giant announced it would go into direct competition with the 20-man enterprise.

It means Kerbside will not be paid public money for collecting waste, and, with less to collect will suffer a significant drop in revenue from recycling the waste.

Boss Paul Brannigan said: "Kerbside simply cannot work with the terms Sita offered to us.

"To do so would have been to kill the social enterprise part of the operation and, really, that is our whole reason for existence.

"So we will go up against them. It won't be easy and without public support, yes, we would be fighting a losing battle but I think we have that support."

Residents across the Calder Valley will now be faced with a choice of boxes to put their recycling waste in – the black box of Kerbside or the green one of Sita.

Mr Brannigan said: "It is David versus Goliath stuff, and this is going to be an uphill struggle for us.

"But we're sure people have appreciated what we've done over the last 10 years and we hope that helps us to stay in business and keep our people in jobs they love and appreciate."

Sita said Kerbside's inability to deal with all households across Calderdale had meant the two firms could not work together.

David Foster, of Sita, said: "Far from wanting to sideline Kerbside, we have been trying to expand their service.

"We have made numerous attempts over recent months to reach an agreement for Kerbside to expand their recycling service.

"However, we have been unable to reach such an agreement

"We have made alternative offers to Kerbside, including providing the opportunity for them to collect bulky waste.

"And we have offered to fund Kerbside to allow the continuation of the training and social enterprise aspects of their work.

"Unfortunately, all of these offers have been rejected."

Calderdale Council's cabinet said it had tried to negotiate between the two firms but failed.

A statement from council leader Stephen Baines, released through a spokesman, said: "The council organised a meeting between Sita and Kerbside.

"Regrettably, they were unable to reach agreement.

"Calderdale Council is confident that Sita will fulfil its obligations to involve social enterprise in its operation."

All Kerbside staff have been offered jobs with Sita.