In bedrooms all over the country men are standing in front of their wardrobes in a cold sweat wondering what to wear to work. What began as dress-down Friday has spread through the week and men can no longer take refuge behind the anonymity of a suit and tie.

As the high-street tailors Austin Reed announced a drop in turnover, which it blamed on the "downturn in demand for tailored clothing", men are having to examine their clothes and work out if they are smart enough for the casual look. Colin Evans, chairman of Austin Reed, said yesterday: "The dress-down trend in the work place is undoubtedly having an effect on the suit market. Our design teams have moved quickly to capture the smart casual market."

Jaeger, which also built its reputation on smart tailoring, admitted it too had had to expand its casual range and had developed the "relaxed lifestyle" look. Lee Rees-Oliviere, a designer for the store, said that three years ago the company found it hard to sell jackets on their own.

"People were buying suits and casual wear but if a jacket wasn't a blazer or a sports jacket they didn't really know what to do with it," he said. "Now they are flying out of the shops, because they are perfect for the new relaxed look which men can wear to work."

But there is dressing down and dressing down. While the accountants at Arthur Andersen can turn up in the ubiquitous chinos and polo shirts, the investment bankers have to make more of an effort.

Morgan Stanley has issued employees with a memo describing "business casual" and warning that if they have a meeting outside the office, a tie is still required.

A City banker said: "It's fairly obvious stuff - no denims or trainers and long sleeves in the winter, although you can wear short in the summer as long as it's not T-shirts."

Paul Clarke, a spokesman for Arthur Andersen, who was wearing a French navy moleskin suit with a grey check shirt (and no tie), said around half the employees had adopted the casual look.

"We did not issue guidelines but told people to trust their common sense. Some older people still prefer to wear a tie but others are turning up in brighter colours and are not wearing suits unless they have a meeting."

But not everyone has found it easy to adapt. Christina Abbott, personal shopping manager of Harvey Nichols, said they had been been besieged by men wanting advice on what to wear now the safe option of a suit and tie had been removed. "Basically they are having to learn about co-ordinating separates, which is something women have been doing for years," she said.

Caroline Paterson, design and retail manager at 40 Savile Row, which is about to open a branch within the offices of Morgan Stanley, said chinos and polo shirts would soon be on the way out. "That look has become the equivalent of the suit. It's just another uniform and is often worn by men with no imagination."

But she predicts the casual look will provoke a backlash. "People will still want to dress up at some point during the week and we will end up with people wearing casual during the week and then putting on beautifully tailored suits and ties to go out to dinner at the weekend."

The push to encourage men to dress casually comes just as women's fashion designers are dictating a return to smart tailored clothing.

The suit is not dead, it is now worn by women.