Nigel Johnson, joint managing director of Catermasters, said this week the decision to withdraw its services from 13 distribution depots was "disappointing" - but that changes in management at the supermarket had led to an impasse over how Tesco workers should be fed.

Mr Johnson said his company's desire to provide fresh food produced on-site conflicted with "a change in position" at Tesco, which 18 months ago had been keen to extend fresh food as part of its welfare package to staff.

Any suggestions of such a lapse were branded "nonsense" by Tesco this week - which claimed Catermasters, of Augusta Place, had simply lost out when the deal was re-tendered.

Either way, the contractors will end a four-year relationship with the supermarket chain at the end of the month. Some 247 on-site jobs at depots including Daventry and Coventry will transfer to a new operator.

Mr Johnson said: "It has not been an easy decision, as Tesco accounts for 16 per cent of our turnover.

"But we are not prepared to steer away from our values to the detriment of our existing employees and clients and our long term aims. We are disappointed, but must protect our reputation. With the change of personnel the focus shifted from fresh food and welfare to as cheap as possible.

"We are about quality food and Tesco made a commitment and bought into that. But things changed and there was pressure to cut corners.

"We wanted an investment in quality fresh food and there seemed to be a recognition of that from the people we were originally dealing with."

At Tesco such accusations were met with a degree of derision by distribution spokesman David Nieberg.

He said: "We strongly refute these claims. We re-tendered the catering contracts in distribution and found more favourable offers from alternative suppliers and, as such, Tesco made the decision to move its business - at an equivalent quality level."

The re-tendering was scheduled on a yearly basis as standard practice, he said, describing Catermasters' reaction to losing the contract as "aggressive".

Changes in management may have occurred, he added, but staff movement was to be expected within a large organisation.

Mr Johnson categorically denied the contract had been put out to re-tender before Catermasters decided to walk out.