The Government has confirmed it will close 39 regional DVLA offices including one in Newcastle, which employs around 50 staff.
These include enforcement workers who will no longer be based in the region once the plans take effect.
In total, more than 1,200 staff will be affected nationwide.
Roads Minister Mike Penning claims the centralisation of the agency's services will save around £26 million a year.
The Government also claims the DVLA reforms will provide a quicker service for motorists, with more transactions available online.
But the Public and Commercial Services Union (PCS) disputes the official sums.
PCS Official for DVLA Northern Branch Mike Mackie said: "Over the next five years this centralisation will actually be cost neutral.
"It won't make any savings until year seven of the plan.
"And if enforcement suffers it will actually end up costing the country money.
"Because of the enormous cost of unlicensed vehicles to the British economy, if these closures mean just 0.1 percent more unlicensed vehicles on the roads it will wipe out any savings altogether.
"This is terrible news for workers and local jobs. It is all about the Coalition's obsession with making cuts, whatever the cost to people."
Making the announcement, Mr Penning said: "These changes - developed after carefully listening to views expressed at consultation - will ensure that the agency delivers a smarter service to bring real benefits for the motor industry and every motorist in this country.
"I understand that the phased closure of the regional offices will come as a disappointment to those directly affected.
"I would like to thank the staff in these offices who have played an importantpart in DVLA service delivery over the years."
Labour MP John McDonnell, the chairman of the PCS parliamentary group said: "This will have a devastating effect on the service available and clearly ignores the needs of drivers and small businesses, the elderly and those who are not IT literate.
"This is a Government car crash. Their manic office closure programme will be entirely counter-productive."
It is hoped some of the staff affected will be able to relocate to the DVLA head office in Swansea and no offices will close until late 2013.
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