Hundreds of staff at the National Museum of Science and Industry walked out on a one-day strike last month, shutting the Science Museum in London and picketing the National Railway Museum in York and the National Museum of Photography, Film and Television in Bradford.

The strike received extensive coverage in the print and broadcast media, and took place during half term - traditionally one of the museum's busiest periods.

The strike is in protest at the offer of a 2.5 per cent pay rise for all staff except senior managers, and a dispute over the implementation of progression scales that were promised in the regrading exercise that took place last year.

But, according to staff and the unions, it is also a protest at what they consider to be government underfunding - a fact acknowledged by the senior management.

Lindsay Sharp, the director of NMSI, said: 'NMSI museums have lost more than £7.7m cumulatively in basic, below inflation grant-in-aid since 1997-8.

Also we have not been fully compensated for the large increase in visitor numbers [as a result of free entry], which is costing the museum about £1m every year.' He said he regretted the action, but that the museum simply could not afford to pay more than the 2.5 per cent offer on the table.

Emily Boase, Prospect's negotiator, said: 'Our members feel this derisory offer, which reneges on previous pay promises, is indicative of a wider financial crisis facing the museum that threatens the fabric of the exhibits and the services that the public has a right to expect.'

She agreed that sustained under-funding by government was damaging the museum, but argued that failing to reward the staff was not a way to deal with this.

The strike comes only two months after the Science Museum launched the first phase of an ambitious masterplan, which includes a complete refurbishment of the museum.

Lindsay Sharp also has major plans for the railway museum in York, the photography museum in Bradford, and - most controversially - the expansion of the Wroughton store to create an experience called Creative Planet.

Sharp said that no NMSI project will go ahead without the necessary capital and operational funding 'from non-grant-in-aid-related sources'. But staff expressed fears to Museums Journal that the plans are already stretching existing revenue.

Eight galleries have shut permanently at the Science Museum in London, five of which will become corporate spaces. There are also plans to close the renowned science museum library which currently employs 13 people.

According to Chris Chilvers, Prospect's branch chairman at the Science Museum, the bulk of the library will be transferred to Imperial College while historic books will be spread among curatorial departments. Chilvers also said that 6 per cent of staff posts across NMSI are currently frozen.

One priority, acknowledged in the NMSI masterplan, is for the museum to earn more income through retail and catering. It is also lobbying government to obtain a better compensation for the introduction of free entry.

The dispute is ongoing and further strike action may take place.