Tesco is planning to develop a stand-alone warehouse to deal with online grocery orders.

The £10m facility will be based by the M25 in order to deal with demand for online shopping in an around London.

Tesco claims that the warehouse, which is expected to be up and running by the middle of next year was a one-off development to deal with demand in the south-east.

If successful it could pave the way for a nationwide online distribution network that could result in Tesco integrating grocery deliveries with non-food and clothing.

Meanwhile specialist online retailer Ocado said that it was now profitable, three years after it started trading.