Tycoon Sir Philip Green has entered the supermarket price war by vowing to undercut the major grocers with his new Bhs food venture.

Bhs will start selling food in its Staines and Warrington stores and Green told The Daily Mail it will be 10% cheaper than the UK’s largest grocers when it launches.

Green’s comments come as the big four grocers have launched a price war to take on Aldi and Lidl, which are stealing market share. Morrisons vowed to invest £1bn into lower prices on many of its basic items while others including Asda have already made moves to retaliate.

Green told the newspaper: “We know what we’re getting into - the most competitive food landscape for some time. There’s no point opening up and getting torn apart because we haven’t got competitive prices.”

The pilots in Warrington and Staines are due to begin imminently and will see branded products such as bread, cakes, fizzy drinks and some frozen items launch in store.

Bhs’s prices are understood to be on par with some supermarkets but lower than others. The Mail said that a two litre bottle of Pepsi would be sold for £1 - the same as Asda but almost half the price of Morrisons.

If the Bhs food venture is successful, Green plans to roll it out to 140 of his department stores, which posted a pre-tax loss of £71m last year.

In pictures: Bhs unveils first food hall at Staines store