The proposal by Chambers Harrap Publishers will affect all 27 staff at the office in Edinburgh, the historic home of the company that was established by William and Robert Chambers in 1819 and published its first dictionary in 1867.

Hachette UK, which now manages the publishing company, blamed the digital revolution for a decline in sales of dictionaries and reference books and said that plans were under way for the two parts of the business overseen in Edinburgh to be separated and moved to the firm’s London and Paris offices.

Marion Sinclair, chief executive of Publishing Scotland, said: “It is an incredibly sad day. It is a long-established company and so much of Edinburgh’s publishing traditions are synonymous with Chambers. It is a pretty unique company in the Scottish publishing landscape and when a name like that disappears, this is our industry’s Johnnie Walker moment.

“Dictionaries have migrated online and a lot of people have the attitude that it doesn’t matter about the brand name. But often it doesn’t have the wealth of lexicography behind it. That is a real specialist skill and that is what we are in danger of losing.”

Philip Jones, of the Bookseller magazine, said: “It is sad, but not unexpected, particularly for a stand-alone business operating in this market. It is not the only publisher that is suffering.

“So much is available faster and for free online. It doesn’t have the credibility that a print book has, but mostly people would tend to look online rather than buy a book for £10 that might go out of date in six months.”

William and Robert Chambers, who moved to Edinburgh from Peebles, enjoyed their first success when they bound and published 750 copies of The Songs of Robert Burns.

Their company’s bright future was sealed in 1832 when they published The Chambers’s Journal, a 16-page series of articles on history, language and science that went on to sell 84,000 copies a week.

Chambers’s Etymological Dictionary, by James Donald, was published in 1867 and by the end of the 19th century the men had turned their company into one of the largest English-language publishers in the world.

The brothers were also leading figures in Edinburgh. William, the younger of the two, served twice as Lord Provost and was largely responsible for organising and funding the restoration of St Giles Cathedral. A statue of him stands on the city’s Chambers Street, which is also named after him.

Robert, who was two years older, was a leading evolutionist and author.

W & R Chambers, which is now best known for its crossword and subject reference dictionaries, was bought in 1992 and was merged with Harrap, which publishes bilingual publications, mainly in France, later that year.

A spokesman for Hachette UK said that bosses had tried to find alternative options for the company, including the possible sale of Chambers, but no buyer was forthcoming.

A spokesman for Hachette UK said: “The digital revolution is changing the way readers consume news and search for information. People are moving away from printed reference books and going online where, generally, they expect to get their information for free.

“This migration affects newspapers and book publishers alike and it is a sad fact that what may be good for the consumer has a major impact on people who earn their living in publishing and journalism.”