The Greek owners of Superfast Ferries, which connects Rosyth and Zeebrugge in Belgium, say the service will sail for the last time on 13 September
but have not revealed how many jobs, if any, will be lost following the move.
Superfast stopped short of announcing why they are to stop operating the service. However, sailings were halved in 2005, as a lack of demand for freight traffic meant a daily crossing was no longer viable.
Experts have described the Superfast ferry as a "gas-guzzler" and as fuel prices have soared, the firm introduced a surcharge last year which added almost 30 to family return trips.
Stewart Stevenson, transport minister, last night said the Scottish Government had been working with parent company Attica to continue the route.
"Ultimately, this is a commercial decision," he added. "We will continue to work with Forth Ports, Attica and others in seeking to identify an alternative commercial operator."
Forth Ports, who operate the Port of Rosyth, warned the closure could hit Scotland's access to European markets.
"This is disappointing news as the ferry link is an important part of Scotland's access to European markets," a spokesman said. "Our own analysis shows that the route could easily attract 60,000 freight units, within a potential marketplace of 200,000 freight units, making this a viable, profitable route for an operator with the right mix of vessels and frequency of sailings."
MSPs described the news as "devastating" for the Fife economy and Labour politicians demanded that Alex Salmond, the First Minister, step in.
Iain Gray, Labour's finance spokesman, said: "Alex Salmond needs to immediately personally intervene and ensure that representations are made to the company at the highest level."
Helen Eadie, the Labour MSP for Dunfermline East, said she would be trying to clarify the situation for passengers who had reservations on the service: "I appeal to Superfast to stay until the end of the year – giving us more time to find an alternative."
Superfast said they would assist travellers who booked journeys scheduled after the date the service is due to end.
David Lonsdale, CBI Scotland's assistant director, said: "If this service is to cease, it would reduce the range of affordable, practical and reliable transport options open to freight operators and manufacturers."
Showcase service is sinking fast
SINCE the inaugural sailing in May 2002, Superfast has carried more than 800,000 passengers, 200,000 cars and 165,000 freight units.
The ferry company received over 500,000 in public subsidy in 2005, in a failed attempt to retain nightly sailings between Scotland and Belgium.
Green campaigners welcomed the service for relieving UK roads of more than 3.2 million tonnes of freight.
Superfast was voted Best Ferry Operator by the Scottish Passenger Agents' Association in 2006.
Parent company Attica was recording dips in passenger numbers from 2004.
Attica Group runs the Superfast Ferries fleet and the Blue Star Ferries fleet, and also offers connections between Greece and Italy and between mainland Greece and the Cycladic and Dodecanese Islands.
Attica axed its Baltic route and sold the ferry to an Estonian operator.