P&O Ferries has fired 800 seafarers as it is “not a viable business” in its current state.
The firm, bought by Dubai-based logistics giant DP World in 2019, said it has suspended sailings “for the next few days”.
Workers currently on board ships were instructed by unions not to leave.
Coaches carrying agency workers hired to replace them are parked near ships at ports.
There were reports that balaclava-clad security teams were sent on to ferries to remove the sacked staff.
Mark Dickinson, general secretary of maritime union Nautilus International, said: “The news that P&O Ferries is sacking the crew across its entire UK fleet is a betrayal of British workers.
“It is nothing short of scandalous given that this Dubai-owned company received millions of pounds of British taxpayers’ money during the pandemic.”
Many P&O seafarers were furloughed during the coronavirus crisis, with the Government paying up to 80% of their wages.
Shadow transport secretary Louise Haigh said: “This scandalous action shows sheer contempt for the workforce.
“Unscrupulous employers cannot be given free rein to sack workers and replace them with agency staff.”
P&O Ferries said in a statement: “In its current state, P&O Ferries is not a viable business.
“We have made a £100 million loss year on year, which has been covered by our parent, DP World. This is not sustainable.
“Our survival is dependent on making swift and significant changes now. Without these changes there is no future for P&O Ferries.”
The company added that, after “seriously considering all the available options”, it has taken the “very difficult but necessary decision” to hand immediate severance notices to 800 seafarers.
Those sacked will be compensated for the lack of notice with “enhanced compensation packages”.
Sailings were halted on Thursday morning and will remain suspended “for the next few days”, P&O Ferries told passengers.
Transport Secretary Grant Shapps said his officials “will be having urgent discussions with P&O about the situation, particularly of concern for their workers”.
P&O Ferries, which transports passengers and freight, operates four routes: Dover to Calais; Hull to Rotterdam; Liverpool to Dublin; and Cairnryan, Scotland, to Larne, Northern Ireland.
It has 2,200 employees remaining in the UK.
DP World was criticised for paying a £270 million dividend to shareholders at the end of April 2020 while P&O Ferries cut around 1,100 jobs as demand for travel collapsed due to the coronavirus pandemic.
P&O began operating ferries in the 1960s.
Cruise line P&O Cruises is unaffected by the developments as it is a separate business owned by Carnival UK.