Alliance Boots has emerged as the latest major retailer to get tough with its suppliers, The Grocer has learnt.

The high-street chemist has written to suppliers to inform them it is to extend payment terms to "75 days from the end of the month of invoice" - which could be up to 106 days if an invoice is issued on the first day of a 31-day month. It is also introducing a 2.5% settlement discount.

In the letter, seen by The Grocer, Alliance Boots said: "We have decided to standardise UK payment terms for invoices, for goods and services purchased from suppliers dated on or after Tuesday 1 April 2008."

The move mirrors a similar step by Iceland last year. The frozen food chain demanded payment terms extended to 90 days, with a 2.75% settlement discount. It backed down after suppliers rebelled.

News of the Boots letter follows press reports that M&S has demanded discounts amounting to up to 6.5% from its largest food suppliers. One source said there was "significant resistance" in the industry to M&S's demands among "pissed off" suppliers.

Meanwhile, Tesco has denied running an initiative called Project Iceberg under which suppliers were said to have been told they will get no price rises this financial year. But some suppliers insisted rumours of its existence were founded on truth. A senior source at a leading frozen food supplier said: "Tesco is saying it is not accepting any price rises from suppliers and Asda is being fairly blunt about the same thing."

Other major retailers are also believed to be taking similar steps to keep their costs down as a price war between the big four hots up despite a backdrop of soaring raw material prices.

Another top-level figure from a multinational said: "We've heard similar things from all the retailers. It's frustrating because we need to get prices up because costs are rising. This is understood by the retailers, but no one wants to be the first to move."

The boss of a major own-label supplier added: "The retailers have been extremely aggressive in making these cost demands and it is getting worse. There is nothing we can do to cut costs and if we can't get price increases through we will be out of business."

It is widely believed the price war - evident in a raft of newspaper ads placed by the big four this week - is being led by a resurgent Morrisons. One senior figure in dairy said: "There is an unholy price war being led by Morrisons, which means Asda is watching Morrisons, and Tesco is watching Asda watching Morrisons. Morrisons is causing a huge ripple effect. For the first time in two years it is keeping the other retailers second-guessing."

However, some suppliers have been successful in negotiating price rises. One said: "We've had successes in getting price increases, including from Tesco. I've read about Project Iceberg but it's not something I've come across."

Another source in chilled food added: "We have negotiated a price increase pretty much with everyone. It's bloody tough but it always is when you are negotiating a price rise. There's only one that hasn't agreed to a price increase. Everyone else is saying it's down to negotiation for the price increase, making the case and showing the evidence, and that's what we have been doing."