Last year, in response to changing customer shopping habits, Tesco decided to reduce the amount of new store space it builds each year, building fewer large stores. Where it no longer intends to develop sites, it will sell them, lease them or develop them for housing.

"We are currently working on plans for over 4,000 homes across the UK, either by building them ourselves or selling our sites to housing developers," the grocer said in a statement on Friday.

Tesco's move could help ease Britain's chronic housing shortage, which is helping drive house price rises.

It will also allow the firm monetise some of its property assets. Britain's average house price was 183,462 pounds in June, according to data from mortgage lender Halifax.

(Reporting by James Davey. Editing by David Clarke)