Construction giant Carillion has gone into liquidation, threatening thousands of jobs.
The move came after talks between the firm, its lenders and the government failed to reach a deal to save the UK's second biggest construction company.
Carillion ran into trouble after losing money on big contracts and running up huge debts of around £1.5bn.
Its failure means the government will have to provide funding to maintain the public services run by Carillon.
David Lidington says wages will be paid to staff working on public sector contracts"All employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do," said government minister David Lidington.
Carillion is involved in major projects such as the HS2 high-speed rail line, as well as managing schools and prisons.
It is the second biggest supplier of maintenance services to Network Rail, and it maintains 50,000 homes for the Ministry of Defence.
Defence Secretary Gavin Williamson told MPs there would be a meeting of the government's Cobra emergency committee on Monday to discuss the situation.
Carillion chairman Philip Green said it was a "very sad day" for the company's workers, suppliers and customers.
The company has 43,000 staff worldwide - 20,000 in the UK.
Labour asks why the government did not act when profit warnings were issued.
There are also thousands of small firms that carry out work on Carillion's behalf - many of those have contacted the BBC with concerns about whether they will be paid.
One company, which provided services for Carillion's prisons contract, told the BBC that it might fail if it is not paid the £80,000 owed to it.
What happens next depends on the actions of a court-appointed official receiver. With the help of a team of experts from accountants PwC, the receiver will review Carillion's business - a process which could take months.
The government has already said it is supporting public services and other firms are likely to take on some of Carillion's other contracts and staff.
“Thank you very much BCC for the very impressive office refurbishment you have done for us. With experience in suspended ceilings and partitions your advice helped us to make the right choices for what we needed. The whole project was made very easy for myself.”
“We have used BCC a number of times and they deliver a very quick turn around but not sacrificing a very high standard of work. We will definitely continue to use BCC."