Swimmers wearing Speedo's LZR72 Racer have set 72 world records since it was launched in February.

 

It was also worn by Michael Phelps at the Olympics last month in Beijing as he powered to a record eight gold medals.

 

Nike even allowed some of its athletes to wear the LZR Racer, an unprecedented move by the world's largest athletic shoe and apparel company.

 

But Nike denied that this decision was a result of Speedo's success, saying it was a "direct result of our long-term growth strategy focusing on the areas where we can have the largest growth."

 

Nike is a distant third in the $200 million (£107.7 million) performance swimwear marketplace - which encompasses consumer swim goods for exercise rather than leisure.

 

Speedo holds roughly 60 per cent of the market share, up from 54 per cent last year.

 

TYR comes in second at 20 per cent and Nike is third at 13 per cent, lower than its 18 percent share last year.

 

Speedo said Nike's move would not have much impact on its own business, such as the launch of the Racer to general consumers next month.

 

Stu Isaac, senior vice president of team sales and sports marketing for Speedo, said: "We've been in the swimwear business for 80 years.

 

"We are going to keep doing what we've been doing.

 

But Evan Morgenstein, an agent who represents a number of top swimmers, said Nike's decision is a blow to elite athletes who depend heavily on apparel companies for their funding - especially in non-Olympic years.

 

Morgenstein's clients include Nike-endorsed Olympians Cullen Jones, Brendan Hansen, Aaron Peirsol and Jason Lezak.

 

Morgenstein said Speedo and TYR Sport are the only two major companies left now that Nike has pulled out.

 

He said: "The truth is that TYR and Speedo are the only two companies pumping any kind of money directly to the athletes.

 

"There are other companies that make suits, but they haven't spent a dime on the swimmers."

 

Morgenstein worries that Nike's decision could be a precursor to other funding woes that might directly affect the performance of the powerful US swimming team at the 2012 London Olympics.

 

He said: "With the tough economic times we're in, Speedo is probably looking at their investment in terms of the athletes, and I'm sure TYR is, too."

 

He called on the US Olympic Committee and USA Swimming to come up with a new funding structure that gives more money directly to elite athletes, instead of putting the bulk of it into training centres that are designed to help the sport at the grass-roots level.

 

Morgenstein said the current monthly stipend of $1,750 (£943) to top-level swimmers is "absurd."

 

He said: "The financial house of cards for a lot of elite swimmers, especially the older ones, may come crumbling down.

 

"In non-Olympic years, many swimmers depend on up to 90 per cent of their funding from the apparel companies.

 

"You're going to see a lot more athletes from China and Europe on the medal stand unless something is done."

 

Nike said following its announcement that it would now focus on six key categories to reach a $23 billion (£12.4 billion) revenue goal by 2011.

 

Those categories are running, soccer, basketball, men's training and women's training and sportswear.