Paul Jensen was in no doubt. As he started his third pint of lager at TJ's Club on Grimsby's harbour front at 10 in the morning, he was fuming: 'Grimsby's finished, it's down the Swanee.' For generations his family has fished, since his great grandfather decided to become respectable and rejected the family business of piracy. Jensen first went to sea when he was 15, and now, aged 26, he says he has more of a past than a future: 'There's no fish left in the North Sea.' In particular, there's none left of the fish that Jensen specialises in: cod.

At this time of morning, only a few years ago, TJ's would echo to the tales of the sea as fishermen relaxed after landing their catches at dawn. Now there's just three trawler crew at a corner table, not relaxing but grieving for a future that now will not be. The harbour used to be packed so tight with boats you could simply walk across it, from deck to deck, but now just a few trawlers are tied up: Iysha, Farnella and Beverley. 'In five years' time there'll be nothing but tumbleweed around here,' says Jensen's drinking partner Bob Pitcher.

Of course, it was no surprise. They knew that for at least two decades government scientists have been warning too many fish were being caught. They knew that environment groups had been telling anyone who would listen that the North Sea, famed as one of the most abundant cod grounds in the world, would soon run out of cod. But now the emptiness of the North Sea is no longer just another scare story from tree-huggers, but, for Jensen on the trip from which he has just returned, shocking, frightening reality .

For eight days he and the rest of the crew were out at sea on the gill net trawler, soaked by rain and sleet. For eight days they tried to think like the cod and follow where they went; they didn't change clothes and hardly slept, their muscles aching from casting the nets every couple of hours. For eight days, they hauled the dripping nets back out from the sea, virtually empty.

The trawler's hold, packed with crushed ice to keep the cod fresh, is designed to keep 15 tonnes. Eight days into a 10-day trip, the hold held just one tonne, not enough to cover costs. 'What's the point of going to sea to put yourself in debt?' said Jensen, sipping more lager. 'We jacked our hands in, asked the skipper to take us back.'

For 2,000 years, the British have fished cod. The fish, easy to catch with succulent white flakes, became a national favourite, the mainstay of the fishing industry and of the national diet. Hundreds of thousands of tonnes of cod were taken out each year, building up great fortunes for those that fished it. Battered cod and chips became as British as beefburgers are American. The first stalls were set up 170 years ago, and now Britain's 8,600 fish and chip shops serve over 250 million meals a year. In total, Britons eat a third of the world's total cod catch.

But it's a fish whose numbers have plummeted so dramatically that the World Wildlife Fund has declared it a 'threatened species'. It's a fish whose scarcity is sending prices soaring and consumption plummeting. In 1994, British households bought 71,344 tonnes of the stuff. In 1999, they bought just 51,065. The price of cod and chips has jumped from 85p 20 years ago, to £2.30 in 1990, and £3.10 now - rising to up to £5 in London. Cod has been taken off the menu of Terence Conran's restaurant chain, while others try to shed its downmarket image, dressing cod up as a luxury like lobster. National cooking competitions are being run to to wean chefs and their customers off cod and on to the dozens of other species of fish found around these shores - hake, ling and coley.

And the North Sea has been closed. For twelve weeks, from February to April, all fishing boats that have any chance of catching cod were banned from huge stretches of the sea, from the coast of East Anglia to France, around the coast of Norway, and off the west coast of Scotland.

The plan is to give cod a chance to spawn in peace. The hope is that the North Sea can avert the catastrophe of the Grand Banks cod fisheries off the Atlantic coast of Canada. These waters were so rich that the Europeans who first discovered them were startled by their teeming abundance. When they needed to eat, the fifteenth-century Italian explorer John Cabot and his men didn't use nets, but simply lowered buckets into the sea and raised them full of cod. From the sixteenth century onwards, the cod of the Grand Banks fed Europe, traded in exchange for wine. Vast fortunes in New England were built on this never-ending fish, whose image was imprinted on new world coins.

So abundant were the catches that in 1873, the French writer Alexandre Dumas predicted that if they multiplied any more, it would be possible to walk across the Atlantic dryshod on the backs of cod. For more than a century they carried on fishing this most bountiful sea. Until one day in 1991, the boats just started coming back empty: the very last cod had gone. All cod fishing was immediately suspended, hoping that after a year or so the cod would come back. Ten years later there's still no sign of them.

The partial closure of the North Sea is a desperate bid to prevent a repeat of the Canadian experience. But it has been devastating for Britain's cod fishermen in Scotland's Peterhead - Europe's largest white fish port - in Aberdeen, and in Grimsby. For Carl Jurgensen, it means the end of what he was born into. His Grimsby boat, Iysha, was the last trawler out of the area that was closed, and so he tried some other parts of the North Sea. 'There was nothing there though - only a very few fish,' he recalls, as he skirts the piled nets and buoys on the deck of Iysha. Before the closure he would have caught eight tonnes, but this time he came back with four tonnes. 'You can hardly see that down there,' he said, pointing down through the hatch to the black gloom below. 'The crews are signed off, I'm losing money. There's no point in trying anywhere else.'

For Jurgensen, it will not just be the end of a livelihood, but the end of a dynasty. The last four generations of his family went to sea. From the age of seven he started going out with his father in the summers: 'I was born into it. The sea is like a magnet - when it's been all right, I can't wait to get back out there.' It was both life and death: his father perished at sea when Carl was 10 years old.

For 25 years he's been out at sea, for the last 12 as skipper, specialising in cod. He paid £50,000 for a quarter share in Iysha, and although the boat is old and made of wood, it is packed with the latest equipment. On the small bridge, there is fax, email, electronic charts, satellite phone, radar - and most important of all, sonar, to find out where the shipwrecks are: 'We fish off wrecks, it's like a haven for cod.' He carries 150 gill nets but loses 20 or 30 of them each trip. He spends a third of his life on the boat, sleeping in a narrow, damp bunk in conditions that are cramped by land standards, but luxurious compared to those of his crew. 'There's no toilet or shower. When I get back, my wife says I can't go near her until I've washed.'

He has a son and a daughter. 'I've told the children not to go into the industry. I'll try and get my son into the police - that's quite a change after four generations at sea.'

In the meantime he has to make ends meet: 'I've no idea how I'm going to survive. The boat's so old, I couldn't sell it.' Unlike farmers, fishermen get no help from the taxpayer. And like farmers, they never make a noise about the good years.

Trawler owners in the 1940s amassed great wealth, building huge mansions up the east coast of Lincolnshire. In New England, the working classes used to call the Establishment the 'cod fish' aristocracy. Mark Kurlansky, in his book Cod puts it simply: 'Men of no particular skill, with very little capital, made vast fortunes in cod fishery.' Until the closure of the North Sea, a crew hand could normally expect to make £25,000 a year, and a skipper twice that. Many skippers in Peterhead, Scotland, earn over £100,000 a year. 'I met a crew member in Norway who earned £92,000 in the last three months,' said one skipper. But you would never hear them say that in public. And now those days are largely over.

The mood is gloomy as Jurgensen discusses the future with the managing director of the Jubilee Fish Company, the largest shipowner in Grimsby, which has a half-share of Jurgensen's boat. Andrew Allard, whose company runs 15 boats, seven of them specialising in cod, seethes with anger: 'The industry is in complete crisis. After the experts have been telling us what to do for 20 years, we reach this. This is the worst it has ever been, and we're pissed off.' He's been leading industry campaigns for some sort of aid package, and had meetings with government ministers, but has received little more than sympathetic words. All the time his boats are coming back empty, and he's having to lay off the crews. Twenty years ago, the ice factory in Grimsby used to produce over 1,000 tonnes a day to keep the fish cool in the trawlers' holds. Now it's down to 10 tonnes a day.

But Grimsby's early morning fish market is busy: a manic flurry of men, all men, in white coats and hats, auctioning thousands of crates of fish in language impenetrable to the outsider. As soon as the fish are sold, they're carted off to Britain's food processors and restaurants. In an hour, the vast hall is empty. But few of the crates contain fish from the North Sea - the vast majority arrives before dawn in a convoy of container lorries, having been fished off the coast of Iceland or the Barents Sea in the far north. One or two crates have North Sea cod, barely 30 centimetres long. In Grimsby's National Fishing Heritage Centre they sport a black and white photo from 100 years ago of a man carrying a cod over his shoulder. The cod is as big as the man, almost six feet long. Last century, such fish were landed regularly, but virtually no one living in Britain has seen cod that size.

If left alone, the cod will live to 20 or 30 years of age, growing to six feet and 200lbs. It grows so large that it has no natural predators, an omnivorous fish that swims along the bottom of the sea with its mouth open, eating anything it comes across. Adult cod eat other fish, including very young cod, and fishermen have found styrofoam cups from ferries in their bellies. Last year, some fishermen suffered shock after slicing open the stomach of a large cod to find the partially digested head of a drowned colleague roll out.

Because it swims slowly, cod is very easy to catch. It will swim from trawler nets for 10 minutes before falling into them exhausted. And once caught, it never puts up a struggle: no good for sport fishing. Cod's laziness means it has the most sluggish of muscle tissue, making its flesh the whitest of the whitefish.

It is also very nutritious. It has virtually no fat (0.3%) and a very high level of protein (18%). The low fat meant that it kept very well salted and dried,hence its historic popularity with the poor. In Mediterranean countries, cod is still more often served salted, rather than fresh.

Fish is the only food in Britain that is still hunted on any scale. It is also the ultimate organic food: there are no artificial fertilisers in the North Sea. But the enduring British love affair with cod above all other species is no surprise to Maurice Gammell. He's set up and sold two large chains of fish and chip shops, and is now managing director of a third: Harry Ramsden's. Founded at the beginning of the century, Ramsden's now sells more fish and chips than anyone else, and according to the Guinness Book of Records has the largest fish and chip restaurant in the world, just outside Leeds. 'It's one of the most nutritious foods you'll get - it's not fast food, it's a main meal,' says Gammell. 'You get carbohydrates with the chips, and protein with the fish. It's not fatty - because the fish is steamed in the batter - and it's very tasty. Cod at its best, you just can't beat - it's white, it's flaky, it's got a steak-like texture. It's a very good staple diet.'

Gammell describes fish and chips as the 'great British invention', which he is now exporting to cities as diverse as Hong Kong, Singapore, Jeddah and Dubai. 'It's not the expats who are eating it, it's the locals.'

Fears of over-fishing started in the nineteenth century. But various governments declared the supply inexhaustible. Thomas Henry Huxley, grandfather of Aldous, sat on three separate British fishing commissions, and in the 1883 International Fisheries Exhibition in London, he declared: 'Any tendency to over-fishing will meet with its natural checks in the diminution of supply. This check will always come into operation long before things like permanent exhaustion has occurred.' For 100 years, government policy was based on Huxley's theory.

From his seafront office window in the former Grand Hotel in Lowestoft, East Anglia, John Casey can see the result of his own advice: there are no fishing boats out there. As stock assessment scientist at the government's Centre for Environment, Fisheries and Aquaculture Science, he helped propose the closure. On his wall, large laminated charts, misnamed 'North Sea Cod: Relative Abundance' plot the fish's demise. Blue circles chart the results of annual surveys, showing how many cod there are aged one, two, three and so on. There are virtually no blue circles showing cod four years old. Half the cod are being taken out of the North Sea each year, ensuring that only about five per cent make it to four, the age they become fertile. 'There are not many cod dying of old age,' says Casey.

Nor are there many cod spawning. In 1965, the total spawning stock of cod in the North Sea was 205,000 tonnes. The sustainable level - where there is enough cod spawning to replace themselves is reckoned at 150,000 tonnes. There is presently just 60,000 tonnes.

The Canadian cod simply disappeared overnight, because as they got fewer in number they retreated in smaller groups to remoter areas. But the fishermen employed better and better tracking technology, giving the cod nowhere to hide. Because the cod harvest wasn't declining, the government brushed aside the warnings from its scientists, who could only say 'I told you so' when the fishermen eventually returned empty-handed.

Cod is also threatened by global warming. The fish likes cold water, and for the last few years the water is thought to have been too warm for good spawning. The fishermen also blame the seismic work of oil companies, setting off explosions on the sea floor which may be responsible for killing many of the cod fry. But for Casey there's a more basic answer: 'The only way to protect fish is to kill fewer of them. It's very straightforward.'

Casey and other European government scientists have repeatedly tried to get the governments to reduce quotas. In 1995, for example, they warned that they had to reduce the catch by 30 to 40 per cent to be sustainable. The politicians of the EU's fishing nations listened to the fishermen, and came up with the proposed reduction of just three per cent. In fact, fishermen's quotas have remained so generous that they haven't been able to meet them for over 10 years. Now, as well as the closure of parts of the North Sea, quotas have been cut by more than half.

Sarah Jones, fisheries specialist at WWF said: 'There's a situation around the world that cod stocks are in a poor state. Cod overall is a threatened species. North Sea cod is in danger of commercial extinction.'

The Common Fisheries Policy did not simply prove completely disastrous - as even European governments now agree - because of the complete failure of political will. Many fishermen simply defrauded the system. They landed cod and declared them as dogfish, which isn't constrained by quotas. Or they simply landed them when there were no inspectors around. One Grimsby trader, who has just retired after almost 50 years in the business, said: 'The quotas aren't policed properly, and there's been no control over the amount of fish being taken out. If there are no rules, human nature takes over, and they just take out as much as they can. There are back doors. It's difficult to stop illegal immigrants coming in - how can you control fish? But I didn't say that!'

One strategy is to try and wean the British off their age-old preference for cod. The Sea Fish Industry Authority has set up an annual national seafish catering competition, to encourage chefs to use lesser known species such as megrim, dab or witch. Howard Thomas, seafish development officer, said: 'There are over 60 varieties of seafood available in the UK, but consumers' favourites when eating out are still cod, haddock and prawns. By introducing young chefs to species like ling and huss we should see more of the lesser-known seafood species on restaurant menus in the future.'

There is some sign of success. Consumption of the grey-fleshed coley - once almost unknown - has almost doubled since 1993. Many fish and chip shops are now making efforts to serve species other than cod when customers ask for a generic 'fish and chips'. Ann Kirk of the National Federation of Fish Fryers said: 'Some fryers are moving over to other species - such as haddock, whiting, hake or plaice.' Sainsbury's are importing more exotic species caught around the seas of South Africa : kingclip, kob and panger.

Last year the upmarket Conran restaurant chain caused a furore by going one step further and simply taking cod off the menu in all its 41 restaurants, including New York and Paris. The chain had been serving 17 tonnes of cod a year, but simply replaced them with fish such as coley, rock salmon, whiting and plaice. David Loewi, the group's managing director, said: 'It is right that people like us do something for the environment, otherwise we'll carry on eating cod until there's none left for our children.'

And the reaction from customers to having their favourite dish removed? 'They appreciated it. We didn't have a single complaint, and our fish sales didn't go down,' he said. It's a contrast to the Livebait chain, which took cod off the menu but put it back on next day after 30 complaints.

But the Conran group may yet also put cod back on the menu. Sir Terence Conran and Loewi recently went to lunch with the Icelandic ambassador, keen to impart the message: Icelandic cod is not threatened. Iceland claims it has successfully managed its cod stocks. They set lower quotas each year - and enforce them - so the cod population is stable. Marks & Spencer and Waitrose now source all their cod from Iceland, as does Harry Ramsden's. 'I'm getting fed up with the bad press. The Icelandic fishermen say that in four or five years, if anything they will be overproducing,' said Maurice Gammell.

Not surprisingly, that's a decision supported by the Sea Fish Industry Authority. Its chief executive, Alasdair Fairbairn, has been trying to urge people to keep cod on the menus: 'There is particular concern about North Sea cod, but only about one fifth of the cod that we eat in the UK is caught in the North Sea. Fish is traded on an international market and our buyers, processors and retailers get imported supplies to compensate for reduced landings from our own fleet.'

More surprisingly, Harry Ramsden's stance is also supported by WWF, who refused to condone Conran's banning of cod. WWF's Jones says the industry must be supported - and made sustainable - through a 10-year recovery programme, not by simply boycotting the fish: 'Cod should not be taken off the menu. If we eat much less of it, and the price goes down, that may force them to catch more of it.' And Jones practises what she preaches: 'I eat cod once a month.'

However, its scarcity has raised cod's status, an irony that has not gone unnoticed in the maze of sheds behind Grimsby harbour. Even though hundreds of vessels have recently gone back out to sea when the ban ended at the end of last month, the industry is still on the verge of ruin. However inland the fish processors are surviving with Icelandic and Norwegian cod. Ben Roberts spends his life filletting cod the same way as has been done for hundreds of years: by hand with a sharp knife and a wooden block. 'It used to be a meal everyone could have, but now it's a luxury,' he said, while slicing out the cheeks of a fish. So far people are prepared to pay: 'People think cod is the best fish wherever you go,' said Roberts, who is an exception to his own rule. 'But I don't eat cod - I prefer other fish!'. Where Roberts leads, the great British cod-eating public seem set to follow.

Cod facts

Cod produces a protein that acts as anti-freeze, so that it can survive in freezing water.

In New England, it was dubbed the 'sacred cod' because it earned so many sacred dollars.

Iceland is the main source of cod for the UK market, but Icelanders rarely eat cod themselves. They prefer haddock.

Sir Edwin Lutyens, the architect, declared in a restaurant: 'This piece of cod passes all understanding'.

Cod roe is eaten both fresh and smoked. The Japanese eat cod milt, or sperm.

There are 10 families of cod, with 200 species. There is one tropical cod, and a freshwater specimen. All other species live in cold seas The latin name for Atlantic cod is Gadus morhua.

The rings from a tiny bone in a cod's head, the otolith, tells its age.

Cod can produce nine million eggs at a time.