An online price war for books has broken out, pitching Amazon against some of Britain’s biggest publishers.

Amazon is angry that Penguin, Bloomsbury and others are discounting titles on their websites, encouraging customers to buy direct instead of using the online retailer.

Penguin’s online store has reduced a boxed set of 20 Penguin Epics from £100 to £55. Amazon sells the collection at £98.64. Bloomsbury offers a 25 per cent discount on all its books, with free postage and packing on British deliveries over £20.

There are fears that Amazon may retaliate by regarding a publisher’s online price as the recommended retail price and applying its trading terms to that. If a publisher discounts a £20 book to £15 online and Amazon has a contract for a 50 per cent discount on the full price, Amazon would pay the company £7.50 instead of £10. Publishers say that this would be unfair and could ultimately drive up prices.

Amazon also faces increased competition from high-street booksellers, including Waterstone’s and Borders, who are stepping up their online activities. Such is the power of Amazon that several publishers did not feel able to talk on the record yesterday. One senior executive said: “It’s very serious. I can’t believe they’d be allowed to get away with it under competition law. Forcing people to increase prices seems to me entirely wrong.”

Others accused Amazon of having become particularly aggressive lately. One source claimed that the online seller recently removed the “buy buttons” from a book on its website to prevent users from being able to purchase it. “They then went to the publisher and said, ‘Give us an extra 2 or 3 per cent or we won’t put the buy buttons back’,” the source said.

An Amazon spokesman said: “It is speculation. We never talk about discussions with suppliers.” He declined to comment further.

Discounters have brought huge price advantages to book buyers but the discount businesses do not have to bear the risks associated with investing in new authors or new titles by established authors. Until the Net Book Agreement was scrapped in 1995, it offered some protection to publishers by ensuring that retailers sold books at the recommended price.

Roger Tagholm, of the trade paper Publishing News, believes that Amazon sees publishers as manufacturers, who should not be setting prices.

But Simon Juden, chief executive of the Publishers Association, which represents up to 140 publishers, felt that Amazon was on shaky legal ground. He said: “Terms of trade will have been set up upfront when contracts were signed. Neither side can unilaterally change those. In my view, Amazon would be in breach of contract if they tried to do this.”

Ursula Mackenzie, chief executive officer and publisher of Little, Brown and chair of the Trade Publishers Council, said: “Our discount to Amazon is based on a notional RRP [recommended retail price], an agreed formula that we work to. For them suddenly to decide they will take a different view of what that RRP was means that the price on the publisher’s website effectively becomes the RRP. They can’t do that unilaterally. What is going to exercise people is that we can all see the growth of Amazon, which is startling and rapid, so they will increasingly have considerable power and there is no real competition to them. That’s the concern.”

There are fears that the latest development could affect authors and independent booksellers. Mark Le Fanu, of the Society of Authors, said: “Discounts demanded by the big retailers have been rising relentlessly, squeezing authors’ royalties. We hope that publishers will resist any pressure to increase discounts still further.”

One publisher was found to be broadly supportive of Amazon, although he also preferred to speak off the record. “I can’t see that it’s a major problem. Amazon sell their books at all sorts of discounts. That’s the nature of the market. They’re free to sell them at whatever price they like.”

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