Traders in Oxford's Covered Market are planning to appeal against a court decision which left them facing a rent increase of more than 26 per cent.

On Monday, the city council won a decision at Birmingham High Court which will mean some traders could pay an annual rent of £27,500, instead of £21,600.

Others pay less annual rent, but a spokesman warned that the increase could mean shops going out of business.

Cllr David Penwarden, who has been negotiating with traders, said there had been a shortfall in revenue to the council from the market of £423,000 over the past two years.

"I don't believe the public would want us to subsidise the Covered Market," he said.

He added: "A programme of improvements is being discussed with the traders which could cost several hundred thousand pounds.

"This includes improving the lighting, redecorating, and replacing unsafe paving."

Seven directors of the Covered Market Tenants' Association met to discuss the court's decision and will recommend taking the case to the Court of Appeal.

Association spokesman Alan Lester said: "We are going to take the game into extra time because we have nothing to lose."

The rents row has dragged on for several years. City council officers say the rent was last set in 1993. They originally tried to impose an 86 per cent rise.

The traders refused to pay and referred the matter to the County Court, where a judge said a ten per cent rise would be fair.

The council then took the case to the High Court, where the 26 per cent increase was set.