Debenhams has confirmed it will tomorrow launch a three-day Sale, which is expected to be extended to cover the whole weekend.

Debenhams' decision to slash 20 per cent off prices in stores and online is likely to lead to another high street bloodbath as Marks & Spencer is expected to go head to head with the department store on Thursday with another one-day Sale.

The move mirrors strategies adopted by both retailers two weeks ago when Marks & Spencer shocked the sector with its first pre-Christmas Sale since 2004 on Thursday November 18.

It coincided with Debenhams’ three day mega sale, promising£200 million of price cuts, which was then extended to include the weekend.

Sources close to Debenhams said that the department store is likely to extend this week's Sale to cover the weekend.

The retailer's first five day promotion, two weeks ago, resulted in a 67 per cent uplift in footfall versus the same five day period the week before. It declined to provide sales figures.

Debenhams deputy chief executive Michael Sharp said the promotion was back by popular demand.

“What’s more we’re not forcing people to shop on just one day, unlike some stores. We’ve spread these credit crunching offers over three, so customers can shop when its convenient for them, not the other way round," he added.

Debenhams added that this week’s 20 per cent discount would go some way to offset its failure to pass on the VAT reduction when it came in to force yesterday.

In a statement the retailer said: “We are not refusing to pass the VAT saving on to customers - we can't due to the complexities. Yes we were taken by surprise by the chancellor's announcement and unfortunately despite working day and night to try implement for Monday we have not been able to.”

From next Monday it will pass on the cut at the tills when the systems problems are resolved.