Iceland already offers a telephone-based home-shopping service with a pounds 4 charge, while a home-delivery service is also available to shoppers who visit the stores. "We believe the launch of this nationwide free service will drive a major expansion of Internet food shopping in the UK," said Malcolm Walker, Iceland's chairman and chief executive.
Iceland will make the service available on Open, the new digital interactive service, when it launches later this autumn.
Rival supermarkets such as Tesco and Sainsbury's charge around pounds 5 for the delivery of Internet-ordered goods.
Iceland said it would incur no incremental cost as it already has a fleet of 1,000 vans for its home-delivery service. Iceland also plans to start selling electrical appliances such as fridges and freezers over the Internet later this year.
The comments came as Iceland reported a buoyant set of half-year results with profits up 24 per cent to pounds 29.2m and like-for-like sales up 10 per cent.
Mr Walker shrugged off the threat from Wal-Mart, saying Iceland would fight its corner as a high street top-up retailer. "I'm glad we're not a superstore group going to war," he said. "Is there life after Wal-Mart? There is if you can compete and differentiate yourself."
Mr Walker said he did not foresee Iceland participating in the consolidation of the sector. "No one has approached us in 15 years on the stock market and we don't need a deal."
He said he not received an approach from Somerfield, which had a merger proposal rejected by Safeway earlier this year, but would turn it down if one was made. "Over my dead body," he said. The shares closed 21.5p higher at a new high of 310p.