They work for De Beers, the diamond giant that has stockpiled the world's surplus stones in its London vaults since the 1930s.

Their job has not changed in more than 60 years. But over the next few weeks, the London office, for so long the nerve centre of the De Beers empire, will experience a cultural revolution. The South African mining group is surrendering its monopoly position by giving up its traditional role of "buyer of last resort" of every stone on the market.

The move will revolutionise the worldwide diamond industry at the very time that it is under siege because of the controversy over "conflict diamonds" which are fuelling wars in Africa.

"De Beers is no longer the custodian of the industry and is running the show for its shareholders," said a diamond consultant.

The South African company controls over 60 per cent of the $7bn-a-year global market for uncut diamonds. Over the years, it has used its dominance of the industry to determine prices by buying up surplus diamonds.

The policy dates back to 1934 when the Great Depression caused a slump in diamond prices and the then De Beers chairman, Sir Ernest Oppenheimer, offered to buy all the rough stones on the market.

Had prices continued to fall, the move would have probably led to De Beers' bankruptcy. But the price recovered and Sir Ernest's gamble laid the foundation for the company's dominance of the diamond industry for the remainder of the century.

The policy even involved buying illegally-mined African diamonds in the early 1990s. Evidence seen by the Financial Times shows that in 1992, when peace talks between the Angolan government and Unita rebels were taking place, De Beers purchased at least $14m of diamonds mined by unlicensed Angolan diggers in the open market in an attempt to avoid oversupply and keep prices high.

The buyer of last resort strategy worked brilliantly in times of high inflation when diamond prices were high and the value of the stockpile rose. But low inflation and the emergence of new players (see below) has exacted a heavy toll on the group.

De Beers spent billions of dollars to accumulate a large stockpile of diamonds which were never sold. At the end of 1999, the De Beers' diamond mountain, hoarded in its London vaults, was worth around $4bn, nearly as much as the company's annual sales of $5.5bn.

Because these assets were not earning an attractive return the share price fell, unnerving several large shareholders, notably in the US.

Analysts estimate that De Beers' shares, listed on the Johannesburg stock exchange, trade at a discount of more than 70 per cent to the company's assets even though the company recorded its highest-ever diamond sales last year.

The poor share price performance, investors' disquiet and the erosion of De Beers' market share by rivals such as BHP, the Australian group and Rio Tinto of the UK, prompted a re-think of the "buyer of last resort" strategy.

Tim Capon, a De Beers director, said: "I was brought up on the basis that never mind what, we would have taken diamonds on our balance sheet. [Now] shareholders are telling us 'you are tying up capital on something that it is not producing a return'."

Last year, De Beers took the unprecedented decision to appoint outside management consultants, the US firm Bain, to carry out a strategic review.

Bain's key recommendation, published last March, was to ditch the role of buyer of last resort and reduce the unproductive stockpile by selling it on the market.

The De Beers board, led by the managing director Gary Ralfe, accepted Bain's conclusions and began repositioning De Beers as "supplier of choice".

Barring exceptional circumstances, De Beers will stop buying excess supply and will sell its stocks. To prevent a 1930s-style collapse in prices, however, the company will try to boost demand through aggressive advertising.

This is a seismic shift in strategy for De Beers. The company that for 60 years has tried to manipulate the market by keeping a famously tight grip on the supply of diamonds is now turning into a demand-driven business.

De Beers spent $170m last year to advertise the gems under its famous slogan "A diamond is forever"; now it wants customers and jewellers to share the burden of a much higher advertising budget.

On Wednesday, the company is expected to tell the 125 "sightholders" - the inner circle of diamanteirs who exclusively buy its diamonds, polish them and sell them on to jewellers - that they have to contribute more to diamonds advertising. Mr Capon points out that the diamond trade spends a mere 1 per cent of retail sales on advertising, compared with about 10 per cent in other luxury goods industries.

De Beers' decision to abandon its monopoly has coincided with the controversy over the trade in illicit diamonds that fuel wars in Africa.

The campaign was started by non-governmental organisations but has now been taken up by the US and UK governments, who are trying to convince other western countries to agree on a plan of action at tomorrow's Group of Eight industrialised nations meeting in Japan.

De Beers knows that if conflict, or "blood", diamonds become an emotional consumer issue, they could trigger a public opinion backlash similar to the one that crippled the fur trade.

"Having spent hundred of millions of dollars on advertising this product, De Beers is deeply concerned about anything that could damage the image of diamonds as a symbol of love, beauty and purity," the company said in written testimony to the US Congress.

De Beers claims that these fears have spurred it into action. After the imposition of United Nations sanctions on diamonds from areas controlled by Unita rebels, in June 1998, De Beers only bought Angolan stones accompanied by a certificate from the Angolan government.

In October 1999, the company stopped buying Angolan diamonds altogether, amid fears that certificates could be forged. The move was followed, two months later, by the closure of all its buying offices in west and central Africa to avoid the risk that illicit Angolan and Sierra Leonean stones could be mixed with legal diamonds.

Last March, De Beers began to sell stones with guarantees that they were not from rebel-controlled areas. The guarantees were generally welcomed in the diamond trade although some quarters questioned whether they went far enough.

An internal British government document, obtained by the Financial Times, said that, although the guarantees were a "significant development in moves towards a system of warranties. . . no independent certification of this system currently exists".

De Beers' strategy on conflict diamonds is motivated by more than just fears of a consumer boycott. Critics say the company has deftly turned the issue from a potential public relations disaster into a well-honed strategy to retain its dominance of the diamond market.

They argue that if De Beers can position itself as a producer and distributor of "clean diamonds", it will keep a tight grip on the market without the expense of maintaining a stockpile.

A former De Beers employee said: "It's in their interest to stop the goods coming [from Africa], but not only because it's not nice what is happening there. They are proposing [measures] that will make them the only buyers of rough diamonds that are licensed."

Others argue that curbing the amount of stones coming from Africa would reduce worldwide supply, making it easier for De Beers to sell its stockpile without disrupting prices.

"The main reason [for the new strategy] is that they want to reduce their stocks. If they can stop rough coming out of Africa and other places, they can reduce the stocks," said a diamond consultant.

Conflict diamonds could also help De Beers to exploit its brand. A recent report by the US Agency for International Development, an arm of the US administration, argued that De Beers "might stand to gain the most from disruption or boycott of trade in alluvial diamonds from conflict countries. This is because De Beers probably has the greatest likelihood of being able to certify the origin of its traded stones".

Some sightholders would welcome the chance to sell De Beers'-branded, "conflict-free" diamonds as it would give them a powerful marketing tool. "We want the De Beers brand on our diamonds. We would be very proud to do that," one Antwerp-based sightholder said.

However, other industry players are worried that De Beers' strategy will drive a wedge between the "legitimate" and "illegitimate" sides of the diamond business.

"Everybody is going to lose. If the issue gains prominence, consumers are not going to bother to differentiate between De Beers and the others. They will just stop buying diamonds," an industry expert said.

De Beers' action against conflict diamonds and the reduction in its monopoly power could help to improve its relationship with the US government.

The mining group has never operated in the US, the world's largest consumer market for polished diamonds, because its monopoly left it vulnerable to antitrust prosecution. De Beers' significant commercial interests in South Africa during the apartheid era also contributed to a frosty relationship with Washington.

The rift deepened in 1994, when De Beers was indicted by a US court on charges of fixing industrial diamond prices. However, in recent times, the company has come under pressure from its US-based shareholders, who control around a third of the shares, to seek a reconciliation with the US authorities.

Although De Beers maintains that a quashing of the conviction is a precondition to the opening of talks, informal contacts with the US authorities have continued.

"We are a different company from 20 years ago. It would be silly not to take a fresh look at our legal position in the light of new circumstances," said Mr Capon.

De Beers' campaign against conflict diamonds may deliver an improved relationship with the US, but has left the company vulnerable elsewhere. Its decision to pull out of western and central Africa could help its competitors to win control of part of the $5.6bn-a-year African rough diamond market.

In Angola, one of Africa's largest diamond producers, this is already happening.Following the withdrawal of De Beers at the end of last year, the Angolan government signed an exclusive marketing agreement with Lev Leviev, a hitherto little-known Russian diamond trader.

Under the agreement, Ascorp - a joint venture between Leviev, two Belgian dealers, and the Angolan government - will be the sole buyer of all Angolan rough diamonds. Leviev will polish and market the stones through its companies in Russia and Israel.

The award of the Angolan contract wrongfooted De Beers, which had hoped that its withdrawal would have stopped the flow of diamonds from Angola.

The company is an investor in one of the country's largest mines but its rights to the production were withdrawn when the Ascorp deal was agreed. De Beers is now considering legal action against the Angolan government.

The Angolan deal also transformed Leviev from a small-time player into a credible rival in just a few months.

In an interview with the Financial Times, he said he had won the lucrative Angolan contract because he was the only party "committed to putting money into the mines. Everybody else was running away."

Leviev and De Beers could go head-to-head next year, when the rights to market around half of the Russian production are auctioned.

De Beers has owned the rights - worth around $800m last year - for decades and is confident that the three-year contract with the state-owned mining company Alrosa will be renewed.

But industry experts believe that Leviev will mount a strong challenge. According to an Israeli intelligence officer: "His main aim was to break De Beers' monopoly in Russia."

The loss of Russia, which accounts for 26 per cent of future diamond reserves, would be a massive blow for De Beers, and would give Leviev control of around one third of all known diamond reserves.

The competitive pressures from Leviev and others have prompted the South African giant to look elsewhere. Last month, De Beers attempted to enter Canada for the first time with a suprise $175m hostile bid for Winspear Diamonds, a Canadian mining company. A presence in the fast-growing Canadian market could make up for the loss of Angola or Russia.

De Beers's decision to pull out of Angola and the rest of central Africa was driven by its commercial interests and is an integral part of its repositioning as "the clean supplier of choice".

However, it is a risky move which could see the diamond giant lose part of its influence in Africa to newcomers such as Leviev.

Just as in the 1930s, the outcome of this latest bold step will shape the diamond industry's future for years to come.

If De Beers loses this round, the piles of diamonds in its London office will get smaller and smaller.

Additional reporting by Michael Holman, Sathnam Sanghera and Nicholas Shaxton