The Government has confirmed its intention to introduce a sliding scale of beer duty at the next election.
But although the news has been welcomed by small brewers, larger brewers are concerned it could cost them their businesses.
As part of its plans to revoke the Beer Orders the Government said it was "continuing to consider the scope to introduce reduced rates of duty on the beer produced by small brewers".
In last year's Budget, Chancellor Gordon Brown said he was "minded" to introduce a reduced rate for small brewers. A final decision is expected in this year's Budget on April 17.
A sliding scale is likely to be calculated on the basis of barrelage, with a percentage discount for brewers producing less than, for example, 50 barrels a week.
The percentage discount would then get smaller as barrelage increases up to an agreed maximum, after which the full duty would be payable.
The Society of Independent Brewers supports the idea, claiming it would benefit the market by supporting small local brewers and encouraging new ones to open.
But Michael Turner, managing director of London-based Fuller's Brewery, said a sliding scale could shut down larger brewers.
"What the Government doesn't realise is small family brewers, who are just large enough to pay full duty, would be driven out of business by this because they wouldn't be able to compete with the small brewers," he said.
Mr Turner said the only answer lay in cutting the duty rate for all brewers - a move the trade has been calling for for some years.
"The key to survival for the rest of the brewers is for the Government to cut duty across the board," he said.
"That's the only thing that will work."
Related stories:
Beer Orders to be revoked (20 February 2002)
What are the Beer Orders? (21 February 2002)
Opinions from the trade on the withdrawal of the Beer Orders (21 February 2002)