

First came the Polish plumbers, overturning the natural order by tackling U-bends in a more reliable and affordable way than their established British rivals. Now there is another field in which east Europeans are driving well-paid Brits out of work - on the frontline in Iraq and Afghanistan.

The market in which ex-military can earn six-figure sums as private security guards overseas is drying up, with salaries in sharp decline and contracts increasingly being offered to cheaper foreign soldiers, the Guardian has learned.

The National Association of Security Professionals (Nasp), an organisation for those working in the private security industry, said former British soldiers are being laid off by companies in Iraq who are turning to east Europeans instead. The number of Britons providing security in Iraq has fallen from a peak of about 5,000 in 2004-05 to nearer 2,000 this year.

Mark Shurben-Browne, a director of Nasp, said the market had reached saturation point, with companies receiving 10-20 CVs a day. But many firms were trying to reduce costs by hiring staff from eastern Europe, particularly Serbs and Croats.

"One company sacked half their British workforce and replaced them with cheaper guys with a special forces background from eastern Europe," said Shurben-Browne.

"The companies are mixing the teams up, keeping two or three expat or British guys on in a team with the rest from eastern Europe."

Shurben-Browne, who served in the 2nd battalion, the Parachute Regiment in the Falklands and as a private security guard in Iraq, said he knew of about 200 ex-British solders waiting six or seven months for a contract to go back to Iraq.

Changing conditions on the ground in Iraq have also had an impact on wages. Firstly, heavy insurgent attacks after the 2005 elections meant a lot of firms cut back because they could not send staff outside the safe zones. Now, with a reduction in enemy activity in Iraq and Iraqi security forces taking a more active role, there has been an impact on demand from private security firms. "Jobs are hard to come by now," Shurben-Browne said.

Andy Bearpark, director general of the British Association of Private Security Companies (BAPSC), said: "There may be some blokes in Iraq earning £100,000 a year tax-free, but £50,000 tax-free is a much more likely figure now."

Bearpark has heard of Fijians, Gurkhas, Ukrainians and Sierra Leoneans being employed, usually on much lower wages than British and US personnel. "There was a US firm which was not even paying Sierra Leoneans 10% of what they paid their US staff," he said.

While most former British soldiers only did the private security work for a fixed length of time, a few did keep returning to it, he added, usually because they had invested the money they made unwisely. "It's not unusual for guys to go and buy shares in a Bangkok brothel and within three months they've lost it all and then they have to try to get another contract to pay off their debts. They're not people used to handling a lot of money. The average guy is earning £40,000-£45,000 in Afghanistan, which is nothing like what people were earning in Iraq," said Bearpark.

A former corporal in the Royal Signals regiment who worked for a private security firm in Iraq, said he noticed work was dropping off when he left in January 2006. The 29-year-old, from Bournemouth, identified only as Andrew, has now trained as a building surveyor. He said: "I only wanted to do it for a fixed amount of time. It's dangerous work. The money's great but it's not worth it if you get killed."