Relaxing planning regulations and giving tax breaks to supermarkets would be an "extremely flawed" policy, claims the Association of Convenience Stores.

The warning was issued following a report by think tank Demos, which this week called for supermarkets to be given a more prominent role in regenerating deprived communities.

It suggested tax breaks in the form of business rate cuts and flexibility with applications would be key in encouraging supermarkets to open sites. "There is no reason why councils should block applications," said Max Wind-Cowie, author of the Civic Streets report. "It is not the case that small, local good-quality businesses are opening up in deprived communities."

However, the latest Grocery Retail Structure survey from IGD/William Reed Business Media revealed that supermarkets were not having any problems opening stores. Supermarket and superstore numbers have risen 3.2% in the past 12 months. Tesco's estate has grown 10.8%, Sainsbury's 10.1%, Morrisons' 9.8% and Asda's by 4.5%.

ACS chief executive James Lowman accused the report of failing to take into account the impact on existing businesses.

"We have been concerned there has been a movement led by supermarkets to see regeneration as a way into some developments that might not happen," Lowman said. "Tax breaks or loosening the planning regulations is extremely flawed. The government should be looking at developing high streets."