According to figures released by the Audit Bureau of Circulations, The Guardian's circulation has now slipped by 4.8% since last July, when it sold an average of 398,373 copies a day.
The Guardian was the worst performing quality morning newspaper. It is investing £50m to develop a smaller, Berliner-style format, to be introduced by 2006.
The Times' July circulation fell by 1.65% to 650,448 copies while the Financial Times was down 1.41% to 421,179.
Staying steady was the Independent, up 0.2% to 262,086. But it has put in a stellar performance nine months after introducing its tabloid edition, with year-on-year circulation up 17%.
Also remaining steady was the Daily Telegraph -- still the biggest selling quality daily newspaper by a long shot -- with an average daily circulation of 904,981 copies, a fall of 0.12%.
The biggest story in the tabloid market was Richard Desmond's Daily Star, which jumped 3.18% in July to 919,103 copies, putting it ever closer to achieving its ambition of sales of more than 1m.
The new Daily Mirror editor, Richard Wallace, still has some work to do. Sales of the paper dropped 0.93% to 1,816,908, putting it ever further adrift of the 2m mark.
The number two slot in the British daily market is now occupied by the Daily Mail. The Sun had a better month. It was up 0.9% to 3,378,306 copies.
In the mid-market, the Daily Mail was up 0.55% to 2,418,743 while rival the Daily Express sank 1.93% to 939,384 copies.
There was disappointing news all round in the Sunday broadsheet market. The Independent on Sunday is enjoying none of the tabloid benefits of its sister daily title and it dipped slightly, dropping 0.48% to 209,003.
The Sunday Telegraph was down 0.81% to 692,021 while The Sunday Times was down 2.96% to 1,304,600. The biggest faller by far was Guardian stablemate The Observer, which dropped 4.14% to 441,193.
In the mid-market, The Mail on Sunday put in July's best performance, jumping 6.14% to 2,412,785 copies. The rival Sunday Express fell 1.67% to 985,457 copies.
The Sunday tabloids put in a mixed performance. The Daily Star Sunday was down 0.03% to 500,274 copies and the News of the World was down 0.77% to 3,706,972.
Trinity Mirror's two titles experienced a more positive month. The Sunday Mirror was up 2.97% to 1,569,781 and The People was up 1.77% to 1,022,243 copies.
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