Convenience retailer Spar is to create 1,000 jobs in a €200 million expansion that will see 100 new stores open by the end of 2005.

BWG group, holder of the Republic's lucrative Spar franchise, said the move would boost annual sales by 48 per cent to €1 billion within three years.

BWG operates about 400 Spar outlets in the Republic, employing 7,500.

The group was acquired in a €220 million management buyout from Pernod Ricard in 2002, backed by private equity firm Electra Partners Europe.

A press conference to publicise the expansion plans was overshadowed by reports that the Government is considering lifting the ban on below-cost selling and out-of-town hypermarkets.

Mr Leo Crawford, chief executive of BWG, said that ending the prohibition on selling groceries below wholesale price - a possibility raised earlier this month by the Tánaiste and supported by the Competition Authority - would inflict lasting damage on domestic retailers while doing little to trim inflation. Likewise, dropping the ban on retail developments larger than 3,500 sq m in Dublin and 3,000 sq m elsewhere would severely restrict consumer choice.

Only the larger multiples stood to gain while the position of independents and suppliers would be severely weakened, Mr Crawford said.

BWG, which recently disposed of several key British holdings, insisted it was committed to its remaining UK interests, Appleby Westward, the Spar distributor for the south-west of England, and off-licence chain Bargain Booze, saying it had not ruled out the latter expanding to the Republic.

Managing director Mr Conor Whelan said the aggressive entry of German discounters Aldi and Lidl into the Irish market - they have seized joint market share of 4 per cent in less than a decade - has intensified competition across the sector.

Nevertheless, market research pointed to increased demand for convenience retail over coming years.

"Our research shows that Spar is well placed to continue to grow in the market despite the continuing intensification of competition in this sector," he said.

"Changing lifestyles are creating new opportunities for convenience retailers. Shopping prices are changing.

"There is a move from weekly shopping designed to address the weekly needs of the family to more frequent shopping.

"Accordingly the convenience market will take an increased share of the family budget."