Tesco is damaging local communities and enterprises and should be broken up, a think tank will argue today.

In a report due to be released today, The New Economics Foundation (NEF) accuses Tesco of anti-competitive practices and claims that the decision to allow the retailer into the c-store sector was “an error of huge proportions”.

Andrew Simms, policy director at the NEF said: “We have gone beyond the point where Tesco has a sustainable market share and they should be broken up.”

The report, Clone Town Britain, argues that high street retailers are taking over independent businesses. It ranks 103 towns and cities and 27 London boroughs according to the prevalence of independent retailers.

Exeter was found to have the least number of independent retailers, while Hebden Bridge in Yorkshire had the most.

Figures released last week by TNS Superpanel found that in the 12 weeks to May 22, Tesco increased its share of the supermarket sector from 27.6% to 29.9%.

Meanwhile, Tesco has denied reports that it could bid for the next licence to run the National Lottery when Camelot’s licence expires in 2009.

The retailer said that talks had taken place with regulators but these were aimed at increasing ticket sales.

Tesco, however, did say that it would be rolling out its Fast Pay scheme, which allows shoppers to buy National Lottery tickets at the checkout, to all of its stores.