Doubts have been raised about the stock market flotation potential of Ocado, after it emerged that Waitrose is to launch a competing online operation in central London within two years.

Ocado, which delivers Waitrose food, is gunning for an IPO which would value the company at £1bn. Waitrose currently offers an online operation, Waitrose Deliver, outside the M25.

It was thought that Waitrose Deliver would not launch within the M25 – which is Ocado’s biggest market – until at least 2013 when its existing contract to supply Ocado is up for renewal. However, Waitrose said it will start Waitrose Deliver within the M25 by 2012.

Waitrose managing director Mark Price told the Daily Mail: “What we want to do is give our customers the full Waitrose offer. We’ve agreed contractually with Ocado that we want to begin that in 2012.”

He added: “The market is growing rapidly and there is enough room for us to complement each other.”

Ocado’s potential IPO has been dealt a blow by last week’s news that New Look is to axe its float. Other floats including Travelport and Merlin have also been pulled in the last few days.

The John Lewis Partnership has a 30% stake in Ocado.