Arnold Schwarzenegger has sacked thousands of temporary California state workers and slashed the pay of full-time civil servants in a bid to halt a fiscal crisis.

California's governor signed an executive order terminating 10,300 part-time jobs and reducing the pay of 200,000 state employees to the federal minimum wage until a state budget is approved.

He said the unprecedented action was to avoid a "full-blown" fiscal crisis and that he had been left with "no easy choices".

"This is not an action that I take lightly. I understand that this will affect people at a time when they are already struggling and so I want to apologise to all the state employees for having to do that," he said.

Officials in California's legislature see the governor's decision as an attempt to expedite the approval of the state budget, which has yet to be agreed one month after the state's fiscal year began. This has left the state unable to pay contractors, higher education workers and legislative employees.

Schwarzenegger's emergency measures are expected to save the state coffers £1bn - still a fraction of the $15.2bn (£7.7bn) state deficit. The layoffs and a freeze on hiring and overtime, which took effect immediately, will save about $80m.

The administration has not said which employees will be exempt. Those in the essential services, such as public safety and emergency medical care, are expected to be spared the layoffs.

The governor's minimum wage order, due to take effect in September, is likely to be challenged by employee unions. The state's comptroller, John Chiang, who has the job of issuing pay cheques, has vowed to ignore the pay cut.

If a budget is not in place by the end of August, Chiang said his office would be forced to forgo more than $3bn in payments to schools, rural hospitals, health clinics, nursing homes other organisations that provide state services.

Democratic and Republican assembly members remain divided over whether to plug the gap with tax increases or spending cuts.