Britain's financial watchdog has launched a full investigation into Tesco after the troubled supermarket massively overestimated its half-year profits forecast by STG250 million ($A456.33 million).
"The Financial Conduct Authority has notified Tesco that it has commenced a full investigation following the overstatement of expected profit for the half year," the FCA said in a statement released to the London Stock Exchange.
"Tesco will continue to co-operate fully with the FCA and other relevant authorities considering this matter."
Britain's biggest retailer stunned investors last week when it revealed that its profit for the six months to August 23 was overstated by STG250 million, after an initial investigation into its UK food business.
It did not specify which profit indicator this referred to.
The dire news prompted Tesco's new chief executive, Dave Lewis, to suspend four senior executives and launch an independent investigation.
Tesco also delayed publication of its interim earnings to October 23, three weeks later than had been planned in the wake of the probe being carried out by accountancy firm Deloitte.
The supermarket giant has previously forecast its half-year trading profit at STG1.1 billion.
Tesco is the world's third-biggest supermarket group after France's Carrefour and global leader, US retailer Wal-Mart.
The earnings error is the latest heavy blow for Tesco, which in August issued profit warnings and slashed its shareholder dividend by 75 per cent, blaming challenging trade conditions and high investment costs.
In Britain, Tesco faces intense competition from German-owned discount retailers Aldi and Lidl.
Lewis, a former Unilever executive, took over in July from Philip Clarke, who shocked markets in early 2012 with the group's first profits warning in 20 years.
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