proposals to allow restaurants and bars to compete on their 3 a.m. closing time, it was revealed last night.

And they predicted longer hours for bars and restaurants could spell "the death knell'' for clubs if Government does not have a change of heart.

Angry industry representatives warned court action could follow if Government pushes ahead with plans to allow pubs and clubs to keep the same late hours as nightclubs.

One nightclub insider said: "There is a remedy where -- if establishments are enjoying a licence which has been previously granted -- and Government changes the rules to the detriment of these establishments, there may be recourse under the law if those businesses are forced into closure or bankruptcy.'' He added that nightclubs had already suffered from a shorter cruise ship season, a longer off-season and falling visitor numbers.

But he pointed out there had also been increased costs for entertainment, liquor and rent, while more businesses -- like Hamilton's Odyssey and Pier Six -- had entered the market.

He said: "If you add all these factors up, it means the death knell for the nightclub industry.

"One or two things could be got through -- but if everything happens at once, it would be very difficult to carry on.'' The news came as Senators yesterday warned clubs faced a dim future if bars and restaurants are permitted clashing hours.

Sen. Alf Oughton said: "Several nightclubs have told me they will go out of business if this goes through.'' And he added one club -- Chick's in St. George's -- had said it could shut its doors if it faced competition on hours.

The news came after Senators sent the Liquor Licencing Amendment Act 1998 back to the House of Assembly with changes -- but not to the controversial late-opening clause.

One amendment would allow members' clubs to have open hours. The law approved by the House would cut club hours to 10 a.m. to 3 a.m.

The Act proposes to change the law to allow outside dining and pavement cafes, as well as banning the sale of liquor miniatures in licenced grocery stores.

But -- according to the nightclubs -- it also poses a major threat to their businesses.

Oasis co-owner Tony Duggan last night declined to comment on a legal threat to Government.

But he added: "We have been greatly concerned about the proposed changes to the liquor licencing laws.

"And we have made strong representations to the Chamber of Commerce through the Restaurants and Nightclubs Division, of which we are members, to that effect.'' Mr. Duggan stressed nightclubs had no problems with alfresco dining and were happy with the permitted hours for nightclubs.

But he said: "Restaurants staying open until 3 a.m. obviously means they would compete with ourselves and other nightclubs.

"That means the value which was placed on the 3 a.m. licences -- which were hard to get in the first place -- would be worthless.'' And Mr. Duggan added most of the restaurants had no intention of taking up the late option because of costs, staffing problems and not being geared up for a late-night clientele.

But he said that restaurants and bars selling food would be in their normal business during the day -- but then "be in the nightclub business until 3 a.m.'' Mr. Duggan added: "We are not in the food business, we are in the nightclub business and that's it. Most of it the restaurants don't want, but everything is being taken away from the nightclub industry.'' And he said: "We simply hope that as far as nightclubs are concerned, things are left the way they are and that restaurants hours stay at 1 a.m.

"But in the interests of tourism and the restaurant business, alfresco dining should be allowed.'' NIGHTCLUBS EAT