Tesco is to turn itself into a housebuilder. The retail giant plans to oversee construction of 2,000 homes in the next three years - equivalent to the output of a middle-ranking housebuilder, according to a Sunday newspaper report.

Proposals for a £400m scheme at Woolwich, southeast London, which could include 960 homes, will be decided by a planning committee this week.

If approved, it will be the biggest housing scheme Tesco has tackled, incorporating 698 luxury apartments, ranging from one to three-bedroom penthouses situated next to a big, new Tesco store. The rest will be low-cost housing.

Tesco said building homes helped to make new store developments commercially viable, particularly in poorer areas. It announced this month it was building cheap homes for staff near a new store in south London.

Tesco's move comes as expectation mounts before tomorrow's announcement of the Competition Commission's initial findings in its inquiry into the grocery sector.

Tesco has come under fire for its large land portfolio, which could add another 145 supermarkets.

It has been accused of grabbing sites to prevent rivals from developing them. But Tesco argues that it can take years to piece together plots of land for new stores.