The new coin was announced as part of the 2014 Budget with a view to creating "the world's most secure circulating coin", helping to reduce counterfeiting and enhance the integrity of the UK's currency.

The Royal Mint estimates that three per cent of all £1 coins are now forgeries. Over the past few years, around two million fakes have been removed from circulation every 12 months, at considerable cost to banks and the general economy.

The final specification of the coin is to be finalised following a public consultation, but the proposed £1 coin has a twelve-sided shape similar to the pre-decimalisation threepence piece.

Budding designers are being asked to suggest designs that show what Britain, or 'Britishness' means. The winner will be invited to visit The Royal Mint to strike their own design on a new £1 before the coins enter general circulation. They will also receive a fee of £10,000 in exchange for the right to use their design.

The Royal Mint has set up a dedicated competition webpage that includes helpful hints, design tips, a short film showing the minting process and images of previous designs for inspiration. All entries must be submitted by Thursday 30 October.

Adam Lawrence, chief executive of The Royal Mint, says: "We are thrilled to have the opportunity to support Her Majesty's Treasury and work on such an exciting project, which will not only modernise the current £1 coin for the first time in thirty years but also potentially change the way that coins are made in the future."

Alongside the competition, HM Treasury has also launched a public consultation, which invites all interested parties to provide responses in relation to the final specification of the new coin and its planned introduction in 2017. The consultation opens on 12 September and runs until 21 November 2014.