Hundreds of parents were considering their options yesterday as a cash-strapped independent girls school announced it would be closing - and one of the country's most prestigious schools launched a rescue package.

The 173-year-old St Mary's Hall School in Eastern Road, Brighton, said it would be forced to shut at the end of the summer term due to "economic circumstances", becoming the latest in a string of small independent schools to be hit by the recession.

Several parents said their daughters had been in tears after the news was announced to them during an assembly.

At the same time Frances King, the headmistress of Roedean, in Brighton, announced it would be taking over the school and all of its buildings, describing the move as a partnership agreement between them.

She said: "By bringing the two schools together we will be able to build an even bigger, better resourced school."

St Mary's Hall reported debts of £1.93 million last year and made losses in four of the previous five years. It is understood Roedean will take on the liabilities in exchange for the school site.

St Mary's Hall will continue to run until the end of the school year, with all 290 pupils and 67 staff remaining at the site.

From September the 200 senior school girls will be offered places at Roedean and will move to its buildings in Marine Drive.

The junior school at St Mary's Hall, which opened in new buildings in 2006, will continue on the same site, possibly changing its name to Roedean Junior.

An as yet unconfirmed number of staff will be made redundant. Teachers at both schools will be asked to apply for jobs at Roedean and one set of staff will be appointed.

Sue Meek, the headmistress of St Mary's Hall, retires this summer. Huw May, headmaster of its junior section, will keep his job.

Mr Andrew Russell, chairman of St Mary’s Hall's trustees, said: "While it is extremely sad that our 173 years of independence are coming to an end, the extent of the competition locally and the current economic circumstances mean that we have no choice but to close our senior school.

"In taking that step, we have however been able to help create one bigger, better-resourced school at Roedean, and by doing so, to strengthen senior girls-only education in Brighton."

Parents from both schools were weighing up the outcomes yesterday.

Fees at Roedean go up to £15,750 for day pupils and £27,150 for boarders, considerably higher than St Mary's Hall's equivalent rates of £12,609 and £20,817.

Roedean said it would try to offer some bursaries and deals but some families have already begun to look elsewhere. It also has tougher academic requirements for entry which would be waived.

Brighton and Hove High School for Girls, in Denmark Terrace, Brighton, which has annual fees of up to £8,898 said it received several enquiries yesterday and was considering its response.

Brighton College, which neighbours St Mary's Hall in Eastern Road, said it was at full capacity but would try to help where it could.

Brighton and Hove City Council said it had a duty to find places at its schools for all children resident in the city and would deal with applications as and when they were made.

Families of girls already at Roedean were said to be concerned at how the changed intake would affect the existing school and had reservations about St Mary's Hall pupils being offered cheaper fee packages.