Tesco has sparked a price war after slashing the prices of hundreds of its toys by up to 60 per cent.

Selfridges and Debenhams reacted to the aggressive price cutting yesterday by halving the prices of some toys. Hamleys is also running promotions. John Lewis has matched the price cuts of competitors as part of its Never Knowingly Undersold price promise.

Tesco has slashed the price of top Christmas toy Disney's Wall-E interactive robot from£24.97 to£9.98 and Hannah Montana styling heads and karaoke microphones are£12, down from£30.

Observers suggested the price slashing may have been implemented to avoid being left with stock after the key Christmas trading period.

The Toy Retailers' Association is expecting toys sales to be down by as much as 5 per cent during the festive season year on year. Sales in November fell 10 per cent on the previous year.

The administration of Woolworths, which accounts for 10 per cent of Britain's toy sales, and its subsequent Sale, affected trade further.

Toy Retailers' Association chairman Gary Grant said: “With 15 days left to Christmas, there's not an awful lot of time left to get rid of stock.” He added that retailers will “no question” be buying from Tesco as the discounts are below cost price.

Tesco is stocking 800 toys - its largest ever range. 40 per cent of those products are on Sale until December 17 at discounts of between 25 and 60 per cent.

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