One of Wantage's oldest family firms, The Arbery Centre, announced today it was closing after almost 120 years, to make way for a high street chain.

A report by The New Economics Foundation says that Britain's rural towns and villages are fast becoming ghost towns as they lose vital services. Community Affairs reporter Roseena Parveen investigates. Pictures by Antony Moore and Richard Cave. Oxfordshire's villages have mirrored the national trend for gradual decline and its towns could soon follow suit.

According to the Oxfordshire Rural Communities Council, 21 rural shops and businesses have closed in the last three years. Only 230 remain.

Many independent businesses have also died out in small towns.

A report by the New Economics Foundation, an independent think tank, says rural life is suffering because local shops, which form the backbone of many small communities, are being allowed to disappear.

NEF policy director Andrew Sims said people in remote areas suffered from losing key venues for social interaction, which local shops and other businesses provided.

He said: "This isn't a sentimental plea for the preservation of Britain's cultural identity.

"It's a wake-up call to remind ourselves about the real value of what is being lost."

The report said the Government should steer planners away from favouring out-of-town supermarkets and encourage local co-operatives, and introduce lower rates for small businesses.

The Arbery Centre, in Wantage, which houses 45 antiques traders, will close its doors to customers on New Year's Day to make way for a retail store.

The company has not been named but is believed to be a national chain.

Manager Shelia Briggs said: "September 11 has particularly hit the antiques trade.

"The company who own the centre were made an offer by a big company and felt it was what they had to do.

"The business has been going for 100 years, so it's very sad. A lot of the customers are very upset."

Vintage clothing dealer Anne Wheatley, who ran Casablanca Costume in the centre, said: "I've spent nearly two years building the business up there and it's come as quite a shock to us all. People have been in tears."

The retailer will follow Dorothy Perkins into the town centre, which became Wantage's first high street chain store when it opened last month.

The foundation also says poor transport services add to the problem blighting rural areas.

Helen Datson, village shops development worker for ORCC, said some Oxfordshire village communities were on the brink of collapse.

She added that ORCC figures for shop closures only include villages and not towns which have suffered. But in towns such as Abingdon and Carterton, independent shops have closed due to competition from out-of-town supermarkets.

"But I would say people here are more active in getting communities together to re-open their shops," she said.

"There are 12 businesses where the community has taken over.

"For an isolated community, even a small city housing estate in the middle of a city, it's really important people have somewhere to to go for social interaction.

"Very often this is the local shop or post office.

"Supermarkets remain a big problem and transport is always an issue for isolated communities.

"Some have suggested Internet shopping and subsidised car sharing is the answer, but that still really serves the wealthy."

Appleton, Little Milton and Adderbury are among villages where communities are thriving after people rallied together.

Adderbury post office is incorporated into the local vet's surgery.

In Appleton, south-west of Oxford, 80 volunteers run the community shop after raising £35,000 to save it.

But Bladon and Freeland are examples where communities are struggling. Bladon village shop and its post office closed four years ago and remain boarded up.

In October, The Lamb, one of only two pubs in the village, closed.

Bladon has no doctor's surgery.

Woodstock is the nearest town -- half an hour's walk away, or a trip on an hourly bus.

Bladon Parish Council chairman Ian Hudspeth said the village shop and post office closure had affected the most vulnerable.

He said: "You would go down and buy things and talk to people, gossip about events. It was a place everyone comes together.

"There's a good community, but it's not as strong as it was."

In Freeland a handful of villagers hope to revive the village shop, which closed two years ago.

The nearest post office and shop is in Long Hanborough, a two-mile walk away. Again, buses there are hourly.

Oxfordshire County Council's assistant environment director, Chris Cousins, said the county's structure plan aimed to support local shops and developments over larger, out-of-town supermarkets.

He added: "The policy is to concentrate development in towns and village centres, to try to maintain healthy town centres and give people a choice about how they travel to shops."