Trade and Industry secretary Patricia Hewitt said a Safeway acquisition by Asda, Sainsbury or Tesco would be against the public interest - locally and nationally.

However, Hewitt said the acquisition of Safeway by Morrisons would not be of concern as long as 53 stores were divested were made where local competition concerns arose.

Forty-eight of these stores are over 1,400 sq metres and five are smaller stores.

Hewitt said she had asked the OFT to supervise the disposals required by Morrisons.

It must approve purchasers and timescales in the divestment of the five smaller stores.

Competition Commission chairman Sir Derek said that if Morrisons are successful with their bid for Safeway he would expect them to "become a strong national player".

Sir Derek added that Morrisons should exert a "positive competitive effect on the grocery retail sector and benefit shoppers".