Ocado and Waitrose have struck a new 10-year supply agreement to run until September 2020 in what is being interpreted as a further sign that online grocer Ocado is gearing up for a float.

The agreement renews Ocado’s right to sell Waitrose goods for 10 years, as it has done since 2002.

Ocado’s relationship with Waitrose is vital to its potential to float, according to commentators, who have said the business would not be as valuable if Waitrose pulled its supply. Ocado said it would wait until after the election to signal whether it wishes to float. It has a potential £1bn price tag.

Collins Stewart analyst Greg Lawless said “the new deal potentially takes away one of the barriers to a float”. Waitrose will still expand its home delivery service, Waitrose Deliver, and the two businesses believe they complement each other. Waitrose will now be able to operate Waitrose Deliver within the M25 from July 2011.

Under the last agreement, Waitrose Deliver was not able to operate inside the M25 until 2012.