Cash is increasing its dominance as the means of payment used most on Britain's high streets as hard-pressed consumers become more wary of using debit or credit cards, according to a new survey.

Confounding predictions that money would be displaced increasingly by plastic, cash tightened its grip on spending last year, figures from the British Retail Consortium show.

Its annual survey of 17,000 retailers, released today, reports that cash was used last year for three in five (60 per cent) payments at tills and checkouts last year, up from 54 per cent in 2006.

Because cash is used frequently for making smaller purchases, its grip on spending patterns by value is less tight, but it still plays a significant role, with notes and coins making up 34 per cent of the amount spent last year, up from 32 per cent in 2006.

The trade body suggested that consumers started to curb past carefree spending after being hit by soaring food and utilities bills, higher taxes and smaller pay rises.

With the consumer slowdown widely expected to deepen this year, this trend could become more powerful.

However, Stephen Robertson, the consortium's director-general, said: “Reports of the death of cash are premature. [It] is not only alive, it's thriving.

"While total retail spending continues to grow, there is a widening gap between the amount spent in cash and the amount spent using cards, suggesting consumers want to keep tight control of their finances.”

The findings sparked a row between the retail consortium and Apacs, the trade body for credit and debit card businesses.

The BRC seized on its findings to protest against what it said were excessive charges by card companies. It said that it was pleased to see the greater popularity of cash, which was cheaper for retailers.

A retailer faces a charge of 2p for processing cash, it said, but bears a cost of 8p for each payment with a debit card, and 34p for a credit card.

“These costs are too high for retailers to absorb and are inevitably passed on in higher prices,” the BRC said.

Apacs argued that a long-running move towards plastic cards was continuing and that retailers negotiated the charges made for plastic card transactions themselves.