Tesco will offer 12 month contracts ‘on all tariffs and plans’ in response to consumer demand.
The move follows research by the supermarket giant which showed that one in four consumers would opt for a shorter term contract if they were more readily available.
The research showed that 48% of those with 18 or 24 month contracts are spending between £40 and £100 on the latest handset because they cannot wait until the contract renewal date.
Meanwhile, 80% said the 12 month contract is their ideal contract, saying that this type of contract offers more regular handset upgrades.
Tesco found that 38% of people feel that their handset is considered out of date within a year of their contract start date.
In May 2008, 12 month contracts made up 13.4% of the market, 18 month contracts 83.4% and 24 month contracts 3.2%.
However, a year later, 12 month contracts had reduced to 2%, 18 month contracts decreased to 39% and 24 month contracts shot up to 59%.
This trend has been fuelled by the rising availability of ‘expensive smart phones’ which are ‘generally only available on a long term contract’, Tesco said.
Tesco Mobile found that a third of those surveyed said length of their mobile contract is a key consideration when picking a deal.
Tesco Telecoms and Tesco Mobile COO David Taylor, said: ‘There needs to be more choice in the market when it comes to mobile contracts. 18 and 24 month contracts are great for some people, especially when it comes to high spec smart phones, but financial uncertainty and rapidly advancing technology means that there are a lot of people who don't want to be tied to their mobile.
‘Tesco Mobile prides itself on customer service and by responding to consumer needs and we hope this move will shake up the market and give choice back to the consumer by winning back the space for 12 month contracts.’