The Nationwide says five years ago virtually all ATMs in the UK were free, but now more than a third impose a fee. Over the last six months the number of fee-charging machines has risen from around 13,000 to about 18,500 and now cost UK consumers more than £60 million each year.

The majority (64%) of the 5635 new machines installed in 2003 were fee charging. Nationwide warns that if this rate of growth continues, it is only a matter of time before fee charging machines out number free ATMs.

The building society has accused providers of fee charging machines of pursuing an aggressive expansion strategy and of poaching sites where banks currently operate free machines. One of the largest operators of fee charging cash machines, Hanco, has been acquired by Royal Bank of Scotland, while HBOS has recently agreed to sell 816 off-site machines to fee-charging ATM operator Cardpoint.

Stuart Bernau, executive director, Nationwide, says: "The UK's network of free cash machines is under threat. This is a serious issue for consumers particularly as machines that were free are being replaced with ones that charge, so it is very easy for people to be caught out and face an unexpected fee."

A recent poll commissioned by Nationwide found that over 80% of people use cash machines in the UK to withdraw money, but almost a third (32%) are unaware that they should look out for stickers or on-screen messages that warn them of charges.

Furthermore, between April and June almost one in every five people (18%) used an ATM that charged for cash withdrawals, but a quarter of these said they didn't see any early warning before requesting their cash.

Nationwide has campaigned for the introduction of clearer labelling of fee-charging ATMs. The Society also proposes a Code of Conduct which it calls on the industry to debate and develop as a code of best practice for fee charging ATMs.