Asda has reported a 2.6% fall in like-for-like sales over the crucial Christmas quarter amid fierce supermarket competition.

Chief executive Andy Clarke blamed rivals chasing unprofitable sales as the figure worsened from a 1.6% decline in the previous quarter.

Asda and major rivals Tesco, Sainsbury’s and Morrisons are battling to protect market share from the threat of discounters Aldi and Lidl.

Full-year like-for-like sales at Asda, owned by US giant Walmart, fell 1% - the first full-year fall since 2008. The fourth-quarter figures covered the 12 weeks to January 4.

Mr Clarke said it was a “solid performance in a tough market” and 2015 would be a “very challenging year”.

He said of the figures: “This undoubtedly reflects a very competitive market where retailers took a decision to drive unprofitable sales.

“From our perspective, I am very confident of continuing to drive our strategy for the medium to long term on the basis of revenue and the appropriate level of return.”

Mr Clarke said the last quarter had seen an “unsustainable” surge in vouchering and promotions from rivals, accusing them of effectively printing £10 notes.