Morrisons has become the first of the big four supermarkets to pledge a price match guarantee against discounters Aldi and Lidl in the latest episode of the ferocious price war.
The supermarket will launch a new loyalty card which will see customers given additional points if their comparable shop would have been cheaper elsewhere.
It is part of a previously-announced plan to invest £1 billion in price cuts over three years as chief executive Dalton Philips battles sliding sales and plunging profits.
Morrisons has said its financial position remains strong despite a sharp fall in its latest half-year profits.
The supermarket confirmed it would increase its interim dividend payment by 5%, with the company's chief executive bullish about the future:
Although it is too early to see the benefits of the three-year plan in the sales line, Morrisons is getting back on the front foot, and implementing change and innovation at real pace throughout the business.
The chairman of Morrisons has said the ongoing price war among supermarkets has made things "tough" after the chain's half-year profits were savaged by 51%.
Morrisons is six months into a three-year turnaround plan involving an "enormous amount of change and modernisation" in which the company has committed more money to lowering its prices.
But the supermarket group said it was too early to see the impact of this work on sales.
Chairman Sir Ian Gibson said: "Conditions are tough, and the industry is going through unprecedented change."
Britain's fourth largest supermarket Morrisons has announced a 51 per cent slump in its first-half profits as it posted its lowest figures for eight years.
The Bradford-based group said it made an underlying pre-tax profit of £181 million in the six months to Aug. 3.
Turnover fell 4.9 per cent to £8.5 billion, while sales at stores - excluding fuel and VAT sales tax - fell 7.4 per cent.
Morrisons has axed 2,600 jobs in a bid to "modernise the way the stores are managed" and "simplify" the management structure, the supermarket's boss said.
Dalton Philips, Morrisons chief executive, said: “This is the right time to modernise the way our stores are managed. These changes will improve our focus on customers and lead to simpler, smarter ways of working.
“We know that moving to the new management structure will mean uncertainty for our colleagues and we will be supporting them through the process.”
Supermarket chain Morrisons is to cut 2,600 jobs as a result of changes to its management structure.
Morrisons has reassured its staff that a theft of data from its payroll system will not leave any of them financially disadvantaged.
The supermarket confirmed that payroll data, inlcuding bank account details, had been stolen and published on the internet, affecting staff at "all levels" of the organisation.
Morrisons said in a statement: "We have already informed our colleagues about the theft, and we are helping them take the appropriate actions to safeguard their personal data."
The grocer was made aware of the theft on Thursday and is working with data security experts to check the safety of its data systems.
Britain's fourth biggest supermarket Morrisons has suffered a data theft from its staff payroll system, including bank account details.
Morrisons said it was made aware on Thursday that the data had been published on the internet and sent on a disc to a newspaper.
The supermarket said no customer data had been stolen, and said initial investigations suggested the theft "was not the result of an external penetration of our systems".
Morrisons said it is working with the cyber crime authorities and the police to identify the source of the theft, and is urgently reviewing its internal data security measures.
Morrisons Chief Executive Dalton Philips said it was investing £1 billion over the next three years in an aggressive price-cutting strategy to take on discounters such as Aldi and Lidl, saying:
We are going to lower our prices on a permanent basis.
The biggest challenge that we face is that there has been a fundamental change in how consumers view discounters.
They are no longer going to them out of necessity. The perception has changed and there is a new price norm.
The rules have changed and we must change too. It is absolutely critical that we begin winning again in our core supermarkets. To do that we must compete on price.
Mr Philips said that after 2015/16 no new supermarkets would be built other than in exceptional circumstances though its network of convenience stores would continue to be developed.
Britain's fourth-biggest supermarket Morrisons slumped to an annual loss of £176 million today amid falling sales and one-off costs of £903 million.
The struggling supermarket fell into the red in the year up to February 2, after a profit of £879 million the year before.
The £903 million charge included write-downs on the value of its stores and its 2011 acquisition of online children's wear retailer Kiddicare, which it now plans to sell in the wake of a poor financial performance.
Like-for-like sales were down 2.8% for the year.