Britain's top tabloid newspapers have prepared for a price war from today after Rupert Murdoch's media empire said it was cutting the price of the Sun to match cuts made by its rival, the Mirror.

News International vowed not to be undercut by its biggest competitor and said it would cut the price of Britain's best-selling paper by a third, mirroring new prices unveiled by rival publisher Trinity Mirror.

"They've picked a fight and we have to respond," said Mr Les Hinton, executive chairman of News International.

Prices for both the Sun and the Mirror will fall to 20p when they hit the newsstands today from 30p and 32p respectively. The price will drop to 10p in Scotland and 50 cents in the Republic of Ireland but Saturday editions will remain unchanged.

The price war comes at a particularly damaging time for the industry as advertising revenues - the biggest source of income - tumble in an economic downturn and circulation figures taper off as readers turn to a greater choice of information sources. It will also be an extremely expensive battle for both sides, costing more than £1 million sterling (€1.6 million) a week. But both newspapers are backed by groups with fat wallets. The Sun sells about 3.3 million copies a day compared with the Mirror's 2.2 million, according to the latest ABC figures based on six-month average daily circulation.

But both newspapers have seen falls in circulation: the Mirror fell 4.9 per cent in April, compared to last year, while the Sun was down 4.06 per cent, according to ABC figures.

Meanwhile, Trinity Mirror's newspaper advertising revenues fell 12.7 per cent in the first four months of this year, while News International's are down 6 per cent.

The price cuts come after Trinity Mirror unveiled a radical revamp of the Mirror last month aimed at reversing sliding circulation and making the newspaper a more up-market tabloid. However, Trinity noted that price was the most effective tool for boosting frequency of purchase and circulation.

In its 1993 price war, the Sun lifted its circulation by 700,000 over nine months when it cut its price to 20p from 25p. Meanwhile, News International's broadsheet, the Times, more than doubled its circulation in a lengthy price war in the 1990s.

News International has a 33 per cent share of Britain's national newspaper market with national titles including the Sun, the Times, the News of the World and the Sunday Times. Meanwhile, Trinity has a 21 percent share of the national newspaper market with titles including the Mirror, the Sunday People, the Sunday Mirror and the Racing Post.

But it also has a significant share of the regional newspaper market, making it Britain's biggest publisher by number of newspaper solds.