TESCO is cutting prices across more everyday items and its online grocery service as it fights back against competition, including the rise of discounters Aldi and Lidl.

The supermarket giant has announced it will drop prices immediately on more than 30 products, including bacon, baked beans, broccoli, peppers, sugar, lettuce, cucumber portions and some of its bread lines.

It is also introducing free click-and-collect on grocery across all locations while one-hour home delivery slots will be available for £1.

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The new prices include a box of six Tesco free-range medium eggs cut from £1.38 to £1, English slightly salted butter down from £1.49 to £1, baked beans down from 45p to 32p and wholemeal bread cut to 75p from 90p.

The grocer said the prices would stay down.

Last week Tesco boss Philip Clarke said customers would see prices coming down as Britain's biggest supermarket revealed a second year in a row of falling profits and a deepening deterioration in UK sales.

Underlying pre-tax profits fell 6.9% to £3.05 billion for the year to February 22.

Tesco is facing a looming price war with its major rivals as they face up to a permanent threat from discount chains Aldi and Lidl, which continue to gnaw at their market shares despite improving economic conditions.

Tesco says it has already cut the cost of staples including butter, milk and eggs by an average of 24% and Mr Clarke said customers would see more prices coming down in the weeks and months ahead.

Tesco UK marketing director David Wood said: "I'm absolutely delighted we can do this for our customers.

"We never stop thinking about how to make their lives better and easier, and these new lower prices on everyday products will really help families on a budget."