The pound also crashed 8% against the dollar, falling from 1.50 US dollars to 1.36.
Banks bore the brunt of the fall, with Barclays down 27%, Royal Bank of Scotland down 28% and Lloyds taking a 24% dive.
Dennis de Jong, managing director of UFX.com, said: “This is simply unprecedented. The pound has fallen off a cliff and the FTSE is now following suit. Britain’s EU referendum has been a cloud hanging over the global economy for the past few months and that cloud has got very dark this morning.
“The markets despise uncertainty, yet that is exactly what they’re faced with this morning. The shockwaves are likely to reverberate for some time and the warning lights are flashing brighter now than ever.”