Supermarket giant Morrisons has slashed the cost of diesel to below £1 a litre in a move likely to intensify the forecourt price war.

The retailer said that from today all its pumps would be selling diesel at 99.9p a litre – a price cut of up to 5p a litre on the weekend and a drop of 34p from its July high.

And trade was already steady at Morrisons’ filling station in Wellington where diesel prices had fallen by three pence to 99.9p a litre at 6am. Unleaded remained at 88.9p a litre.

Mike Woodyet, assistant manager, said today: “Since the price went down, we have had a lot more diesel customers than normal for a Monday morning. It has been steady.”

Motoring group AA welcomed the news, predicting other retailers would now follow.

Later, supermarket chain Asda said that from tomorrow it was reducing the price of its diesel to 99.9p a litre, with petrol coming down to 87.9p a litre.

Supermarkets have been leading the way in cutting the price of petrol, with Morrisons being the first to drop unleaded below the £1-a-litre mark in October and under 90p last month. Today’s announcement sees the chain dropping the price of diesel by between 3p and 5p on its forecourts across the UK.

Marc Bolland, Morrisons chief executive, said: “Morrisons is taking the lead again in helping motorists. This time, we are the first in the UK to sell diesel for less than £1 a litre. We are absolutely committed to giving the strongest value for our growing number of customers.”

The move means drivers of a typical diesel family car will be more than £18 better off on a full tank of fuel than they were in July.