The company is now offering $1-a-litre milk through more than 600 Coles Express outlets Australia-wide in what is seen as a direct attack on the traditional corner shop - a sector already suffering in the crossfire of the supermarket giants' food price war.

Coles has not added its $1 bread to its convenience store offering but did cut the price of its Coles brand bread from $2.49 to $2.30.

According to a recent report from industry research firm Ibis, consolidation is inevitable in the same way that Coles and Woolworths have cornered the supermarket sector.

The president of the Queensland Dairyfarmer's Organisation called for consumers to boycott the cheap Coles Express milk and support their local independent corner stores, which are being squeezed out of business.

Coles corporate affairs chief Jon Church denied the price cuts would put pressure on independent convenience stores, saying ''the volume of milk and bread sold at Coles Express is very small compared to Coles supermarkets and will not make a material difference to other convenience stores''.

''We have aligned prices with supermarkets because customers told us they did not understand why they should pay more for the same product at Coles Express. We thought they had a point and so we now offer the same price for these products whether bought at our convenience stores or supermarkets,'' he said.