Sales of cigarettes fell by 10.7 per cent in the 10 months to the end of October, the Republic's biggest cigarette manufacturer, Gallaher, said yesterday.

The British tobacco company, whose brands include Silk Cut and Benson & Hedges, blamed the fall on successive duty increases and the ban on workplace smoking, introduced last March. However, it said it was still too early to gauge the full impact of the ban.

"Monthly volumes have continued to fluctuate considerably since the introduction of the ban and it is still too early to assess the longer-term impact of the ban," Gallaher said in a trading statement released yesterday.

Around seven billion cigarettes are sold here each year and last year the Exchequer took in €1.1 billion in tax on tobacco.

But figures released with the Budget earlier this month showed that tax receipts from the tobacco sector were down by 16 per cent in the first 10 months of the year and €50.8 million below forecast. For the full year, the tax take from cigarettes is expected to be down 17.6 per cent on 2003 with total receipts, at €1.03 billion, expected to be €128 million below forecast.

Earlier this month Imperial Tobacco announced it was closing its John Player cigarette manufacturing plant in Dublin with the loss of 90 jobs in the New Year.

Last year, Gallaher, which holds around 50 per cent of the Irish cigarette market, closed its plant in Tallaght.