Staff at Diss Community Playgroup have blamed the credit crunch – the downturn in economic fortunes – for the fact that more parents need to work all day and cannot leave their children with the group for more than a few hours at a time.

Manager Kim Boardman has also hit out at nurseries that are attached to primary schools – saying their increased intake of children under four has left playgroups with falling numbers.

"The school nursery takes children very young and that has affected us," she said.

"They used to only take children in September but now they will let them join at other times during the year."

A spokesman for Norfolk County Council said: "The age children can begin nursery schools has not changed and is older than the age at which children can begin attending playgroups."

"Nurseries can take children in the term after their third birthday and provide children with access to early years education.

"There was a big increase in nurseries attached to schools in the late 1990s, when we had more than 50 opening in the county.

Diss Infants and Nursery with Children's Centre headteacher Marion Dawe said: "I haven't really noticed a difference in numbers here. In my time we have had a few vacancies but we are certainly running at full now."

The nursery offers half-day places, five days a week for 52 children.

The Diss Community Playgroup, which is based at the DC3 church in Vinces Road, said it cannot afford to continue after this week – leaving just one other playgroup in Diss.

"Us closing has taken away the choice," said playgroup assistant Jan Bevan. "The only other playgroup in Diss is at the Corn Hall.

"There are all these new estates going up at this end of town and we are having to close.

"But we have leafletted the local area and done all we can to attract new members."

Mrs Boardman said there had been a decline in numbers over the last year and its current financial situation meant it could not carry on.

"In the past, if we have had low numbers, we have ridden it through and it has been fine but this time the financial strain has been too much," she said.