Patricia Hewitt, the trade and industry secretary, yesterday paved the way for more supermarkets to open in-store pharmacies, a trend which small chemists claim will threaten their existence.

Ms Hewitt rejected complete deregulation of the £8.6bn-a-year business of providing medicines but said local health bodies which control the contracts to dispense prescriptions must take account of consumer choice.

She said primary care trusts must make it easier for pharmacies to be established in large shopping centres. But both these businesses and those open for more than 100 hours a week must provide a full range of services.

In addition, they should develop more mail-order and internet services for non-prescription drugs.

The office of fair trading earlier this year recommended a fully deregulated market.

The Department of Health was worried that supermarkets might just dip into the more profitable parts of the pharmaceutical business and take away trained pharmacists from areas of need.