In a move that will be seen as a major blow to Britain's already struggling industrial base, the company plans to close its technology centres on Teesside, in the north-east of England, and in Rotherham, South Yorkshire, over the next 18 months.
A source told 'The Sunday Times' that Tata Steel may then shift this research to the Netherlands and India, resulting in 300-400 job cuts in the UK.
In November last year, the company had revealed plans to restructure its British business, which is expected to lead to 12 site closures and 900 job losses.
Its Europe operations have been hit by a combination of high energy costs, falling demand and plummeting steel prices, which have fallen by 5 per cent in the past month.
Demand has slumped 30 per cent since 2007, largely as a result of China's slowing growth rate putting the brakes on its appetite for the metal.
The European steel operations of Tata, a result of its acquisition of Corus back in 2007 for an estimated 6.7 billion pounds, is believed to be operating with towering debts of 3.4 billion pounds.
Tata Steel employs around 19,000 workers in Britain and controls 46 per cent of the domestic market.
Despite the tough environment, it has invested hundreds of millions of pounds in the British operations, including 185 million pounds on a new blast furnace at Port Talbot in south Wales - the company's prime asset in the UK.
Its other large plant in Scunthorpe produces flat-steel products, used mainly in the construction and infrastructure markets.
Tata has previously dismissed talk of selling some of its British assets but it is believed the company may seek a partner to invest in its Lincolnshire plant.