Big supermarket chains were yesterday given the opportunity to build out-of-town developments after the Government released proposals to relax planning laws.

There were immediate fears that corner shops and smaller stores would lose business or be forced to close as people opted to drive out of town.

The White Paper suggests ditching the current test, under which supermarket chains must prove that a new outlet is needed on the outskirts of towns before they can receive planning approval.

Under the latest proposals, the “needs” test will be merged with the current “impact” test, which assesses whether a new store would affect trade in the town centre. The White Paper insists that the Government is “fully committed to promoting the vitality and viability of town centres,” and that a replacement test would be introduced to protect high streets.

Independent retailers expressed concern that the new rules could lead to shops going out of business. James Lowman, chief executive of the Association of Convenience Stores, said: “There is a lot of fear of the unknown.”

He said that in Scotland, where planning rules did not require a needs test, there was a higher proportion of new development out of town than there was in England and Wales. “The needs test, although imperfect, has overwhelmingly been a brake on out-of-town development and we are concerned that they are bringing in something which is not defined, with only promises that it will be better,” Mr Lowman said.

The Government will begin consultation on the new planning test this summer and will finalise changes by spring next year. The new rules will take into account the finding of the Competition Commission inquiry into the grocery market, which is expected to report in November.

The White Paper suggests that the Government will introduce a test that “promotes competition and improves consumer choice, avoiding the unintended effects of the current need test”.

Stuart Robinson, head of planning at CB Richard Ellis, the property company, said the indications were that the Government had taken into consideration concerns that removal of the needs test would limit the powers of local authorities to control new retail developments. “Planning has always been against dealing with competitive issues, but that may now change,” he said.

Sainsbury’s, the supermarket chain, has been lobbying for a “fascia test” that took into account the number of stores that a particular retailer has in an area.

The plan

— Independent commission to decide on major infrastructure projects

— A simplified local planning system to speed up home improvements such as lofts, extensions, conservatories

— Homeowners will no longer need planning permission for green improvements such as solar panels and wind turbines

— Legal requirement for developers to consult public

— New test to boost out-of-town shopping where it will not damage town centre business

— Local councils will have the power to rule whether out-of-town shops should go ahead

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