Tesco has sparked a price war on toys ahead of Christmas as retailers battle to avoid being lumbered with unwanted stock.

The supermarket giant has cut prices by up to 60% on some toy lines, prompting a number of major department stores and other rivals to follow suit with substantial cuts.

The news will be regarded as a sign of the wider desperation being felt by retailers during the key festive period.

Tesco is currently stocking its largest range of toys to date, with more than 800 items on the roster – many of which are now available at heavy discounts.

“Tesco has made a decision to cut down on toys because it increases the shelf space it gives to toy products for Christmas and it wants to shrink it back,” Gary Grant of the Toy Retailers Association told The Times. “With 15 days to Christmas, there's not an awful lot of time left to get rid of stock.”

He added: “The prices we have been surveying are substantially below cost price. There will be toy retailers buying from Tesco, no question.”