Tesco has unveiled a £500 million price-cutting campaign, called ‘the Big Price Drop’, which will launch on Monday – but Asda and Sainsbury’s have scoffed at the plans.

Under the campaign, Tesco will reduce the prices of 3,000 everyday products - such as milk, bread and fruit and vegetables – with the cost to be covered by cutting the number of multi-buy promotions and scrapping its double Clubcard points reward offer, meaning the scheme will revert to one point for every pound spent.

However, Tesco has said it will increase the value customers can get from their Clubcard vouchers by improving the exchange rates on the most popular rewards, such as Pizza Express, Café Rouge and Strada, from 3 times to 4 times the value. 

Richard Brasher, Tesco UK chief executive, said: “Across the country families are telling us the same thing - their budgets are under real pressure.  They want more help today to afford everyday essentials. We have listened carefully and for families facing hard times and looking for genuine savings, The Big Price Drop will cut prices on the products they need to buy the most. 

“We're giving customers a more straightforward shop - reducing the number of promotions and putting the emphasis on clear and reliable savings that everyone can benefit from.”

Asda said: “No amount of spin can change the fact our price guarantee ended price wars.

"No ifs, no buts, no fine print - 10% better value than our rivals on a comparable grocery shop or a voucher to make it so.

"Others can huff and puff as much as they like - shoppers want savings not spin, pounds in their pockets, not points on plastic.”

Sainsbury’s said of the campaign: “This is classic smoke and mirrors from Tesco, giving with one hand and taking with the other. Removing double Clubcard points will save Tesco £350 million.

"It is no surprise to us that Sainsbury's price match policy, together with a stronger own brand offer, has forced Tesco in having to take this kind of action.”