The number of foreign firms bought by British companies fell to its lowest in more than 20 years in the first three months of 2010, official data shows.

The Office for National Statistics said spending by UK firms on foreign acquisitions fell to £192m in the three months to March, the lowest since records began in 1987.

There were only 10 acquisitions abroad by UK companies with values of £1m or more, also the lowest since records began.

Foreign takeovers of British companies also fell, to £14.3bn from £15.1bn in the previous quarter, but came in higher than in preceding quarters.

The largest transaction was the acquisition of Cadbury Plc by Kraft Foods Inc, which sparked a wave of negative publicity in the British press.

A fall in the value of the pound over the past two years has made British companies a more attractive proposition for overseas firms.

Britain’s new coalition government is looking to see whether rules governing takeovers of UK companies need tightening and has launched a wide-ranging review of the independent Takeover Panel.

The Liberal Democrats, the smaller party in the coalition, have argued that there is a case for reinstating a public interest veto to prevent short-term speculators damaging domestic interests.