London Welsh are to fold but hope to reform in the new year.

Chairman Gareth Hawkins admitted the 131-year-old club's current business model is "totally unsustainable" and said they had no alternative but to seek voluntary liquidation.

The intention is for London Welsh to reform in 2017 as a semi-professional outfit and raise £300,000 to regain their place in the Greene King IPA Championship.

Hawkins said on the club website: "London Welsh has reached a difficult point in its illustrious history. Due to a playing budget of £1.7million and gates at games numbering as low (as) 400, the club's current business model is totally unsustainable.

"The debts accrued from trading in this way have left the club with no alternative but to seek liquidation. Having to break that news to 40 staff members yesterday was extremely difficult.

"All creditors of London Welsh Rugby Club will be contacted by the liquidator.

"In the new year, it is the hope and intention of the board that London Welsh will be able to return to playing at Old Deer Park. However, it will first be necessary to change the club's business model to a semi-professional set-up and form a new company, and then raise £300,000 so that the club can regain a position within the RFU Greene King IPA Championship.

"Richmond have proved that a club can compete in the Championship with a semi-pro model, and I firmly believe we can make this work in 2017.

London Welsh won the Greene King IPA Championship play off final in 2014 (Getty Images)

London Welsh currently sit fifth in the Championship table, with five wins from 11 games.

They competed in the Premiership in the 2012-13 and 2014-15 seasons but were relegated immediately both times, failing to win a game in the second campaign.

Established by and for London's Welsh community in 1885, the club has contributed 177 players to the Wales national team and 43 players to the British and Irish Lions over the years.

In 2009, the club went into administration shortly after turning professional but were allowed to continue in the Championship after being bought out.