The pounds 75m investment will see the first Asda Fresh store open in Tilehurst, Berkshire, this week with the second planned for Kingshill, Kent, next March.
The smaller-format stores will be about half the size of a typical Asda hypermarket. They will feature mainly fresh food and will not stock the George range of clothing.
The decision has been prompted by strict planning restrictions on large out-of-town superstores as the Government seeks to protect town and city centres.
Asda's development director, Gavin Parker, said: "The growing scarcity of large-scale food sites means that it's increasingly important to consider alternative formats."
The smaller stores will also enable Asda to expand in the South-east which has traditionally been dominated by Tesco and Sainsbury's. Asda is also trying to expand in the South using its home shopping service Asda at Home which it runs out of warehouse-style centres.
The plans indicate that Asda's new American owners are not solely interested in huge, out-of-town hypermarkets but are willing to take market share by attacking rivals with smaller store concepts.
Asda has been trading strongly in the UK with underlying sales up by around 8-9 per cent. Last week the group confirmed that Archie Norman was stepping down as chairman to pursue other interests.Reuse content