Staff at the Camden-based company, which also employs temporary and freelance crafts-people, were given 30 days' notice at the beginning of the month, but, according to the Jim Henson Company president Peter Schube, "no determination or decision" about the future of the site has been made.
Schube told Broadcast: "We told our staff two weeks ago that due to a drastic downturn [in UK film business] and punishing exchange rates, we were forced to look at alternatives - a wide range. It is a possibility that we won't operate a full-time office."
He added that a sale of Henson's UK branch, which recently created the Vogons for the film version of TheHitchhiker's Guide to the Galaxy,was not an option because "the brand and name is too important". Schube also confirmed that the two other Creature Shop branches operating in New York City and Los Angeles would stay open.
The news has prompted the UK visual effects industry to call for the government to clarify its position on tax breaks for the film industry. When the tax relief rules were withdrawn for review last year it caused US producers - with millions of dollars to spend - to think twice about coming to the UK.
Mike Kelt, managing director of animatronics and physical effects company Artem, said: "Behind the scenes the tax changes are catastrophic and the entire industry is highly concerned. There will be other companies that go to the wall, without a doubt, because of them. The foreign investment is just not there."
The shift from animatronics to computer-generated effects, such as the images seen on Walking with Dinosaurs, is also believed to have played a significant part in the Henson Company's difficulties.