Supermarket giant Asda entered the bidding war for Safeway today.

Bradford-based Morrisons last week revealed it had agreed a £2.9 billion bid for the supermarket group, before Sainbury's entered the fray to declare it was also interested in the grocery chain.

Now Asda, which is owned by the world's largest retailer - US firm Wal-Mart - has joined the battle.

Asda, which has 256 stores, was close to agreeing a merger with Safeway in the late 1990s before Wal-Mart gate-crashed the deal at the last minute.

Wal-Mart is expected to talk to the Office of Fair Trading today to seek clearance for a bid.

But Morrisons still believes its offer for Safeway is in the best interest of the consumers.

It said the proposed £3.16 billion cash and shares bid by Sainsbury - as opposed to the Morrisons £2.9 billion all shares bid - for Safeway would lead to less choice and higher prices.

Sir Ken Morrison said: "A combination of Morrisons and Safeway would create a strong fourth national food retailer which would strengthen competition and be in the best interests of consumers and suppliers.

"Any combination that reduces the national players from four to three would lead to less choice and the risk of higher prices. Our offer is recommended by Safeway."

Tony De Nunzio, president and chief executive of Asda, threw the US grocery giant's hat into the ring today and declared: "I think it's relatively clear the business is up for sale so the time is now right for us to make this announcement."

He dismissed reports Wal-Mart was in talks with US buy-out group Kohlberg Kravis Roberts about making a joint bid for the business.

He added: "This will be funded through cash reserves. We have the financial muscle to ensure our offer is attractive to Safeway shareholders."

Meanwhile, retail union Usdaw has called for a speedy end to the uncertainty surrounding Morrisons bid.

Sir Bill Connor, Usdaw's general secretary, said: "This latest development will do nothing for the thousands of Safeway workers who are probably wondering which company they will be working for in the next few months."