Asda will close its two dedicated picking centres at Watford and Croydon, and shift the service to 13 stores in the South East area. The company expects to complete the transfer by 30 March 2002.
According to Asda the move will allow it to double the number of products available to order in London and the South East from 5,500 to 11,000.
The company also said that the @t Home service would now be available to more customers, increasing the number of households with access to Asda @t Home from 8.4 million to 14 million by the end of 2002.
The move marks a dramatic change of strategy for the supermarket, which initially turned its back on the store-based online shopping systems that were pioneered by Tesco.
Speaking to Computer Weekly last year Mike McNamara, chief technology officer at Tesco.com said: "Everyone else went out and bought a warehouse, but nobody in the world has proved the economic model of running a warehouse." McNamara predicted the major supermarkets would eventually follow Tesco's lead.