Savvy savers are moving their cash to Tesco, Britain’s biggest supermarket chain, which has found itself in the unusual position of having the most competitive savings rates on the market.

Last month customers opened more new accounts than in the whole of 2007 as savers were attracted to the retail giant’s Internet Saver account. It promises a 6 per cent return on deposits below £100,000 – more than double the return of similar accounts on the high street. Although it includes a bonus of 1.5 per cent for the first 12 months, experts say that as interest rates tumble savers should grab the 6 per cent deal while they can.

Michelle Slade, of Moneyfacts.co.uk, the financial website, said that Tesco had “the best no-strings instant access rate at the moment. Recently rates of 7 per cent were easy to find, but now 6 per cent looks incredibly competitive.”

Interest rates on savings accounts have fallen in recent months to their lowest level in more than four years as banks and building societies respond to the rate cuts by the Bank of England. Many high street banks have already slashed savings rates. At the end of November Halifax reduced returns on its accounts by up to 2.22 percentage points and is expected to cut rates further in the next month.

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The Hi-Save internet savings account from ICICI, the Indian banking giant, which has dominated best-buy tables in the past year, dropped from 5.5 per cent to 4.5 per cent yesterday. The account was offering a 6.41 per cent return in January.

The average rate on an instant access account is now 2.22 per cent, compared with 4.24 per cent a year ago, according to Moneyfacts.co.uk. Tesco, which has 400,000 savings account holders, said that its savings rates were under review but that it is committed to remaining competitive.

This year Tesco bought out the 50 per cent stake in its joint financial services venture from Royal Bank of Scotland and aims to increase annual turnover in the operation to £1 billion.