Plans to free up the high street pharmacy trade have been condemned by a leading think tank.

Proposals to increase competition could "trigger the slow death" of traditional high street chemists, the New Economics Foundation warned on Wednesday.

In its report, the NEF issued a warning that the compromise offered by industry secretary Patricia Hewitt "benefits no-one - least of all pharmacy users".

Backbench MPs from all parties have already voiced concern that the plans, which could allow supermarkets to widen their pharmacy services, would hit small high street traders.

The overhaul of existing plans followed calls by the Office of Fair Trading to abolish the rules governing the number and location of outlets that can handle NHS prescriptions.

The think tank claimed the government's new proposals amounted to "deregulation by stealth".

"The government had a chance to stand up for principles and not big business profits on the issue of community pharmacies - and throw out the recommendations of the Office of Fair Trading," said Molly Conisbee of the NEF.

"Instead they have opted for deregulation lite - a middle way that benefits no-one. Once again we see a government that lacks the courage to stand up for locally run services that benefit the most deprived people in our communities."