Owned by US corporation Wal Mart, the company has viewed its move into the Northern Irish marketplace as a major success since acquiring all but one of Safeway's 13 outlets in the Province in 2005.

Continued expansion has seen the retail giant's operation in Northern Ireland grow to 16 outlets. The company has repeatedly stated its desire to have 20 stores across the country by the end of the decade.

It is now believed the north west - and Londonderry in particular - is seen as a lucrative region by the company.

The Sentinel understands Asda representatives have visited the region to assess demand and gauge the viability of potential locations.

A source this week claimed two locations in the Waterside - thought to be the former site of Desmonds factory in Drumahoe and a green field site in the Caw/Gransha area - have been looked at by the company.

A spokeswoman for Asda refused to be drawn on the possibility of a Londonderry store.

"At this point there is nothing to confirm," she said. "This is simply general market speculation."

An Asda store would be seen as a major economic boost for the area and could result in the potential creation of hundreds of new jobs for the city.

Londonderry's geographic border location could also see scores of cross border shoppers flock to any new store.

Last month it was claimed hundreds of shoppers were making weekly 300 mile round trips from Dublin to the Asda store in Strabane to save money.

Private bus companies in the Republic of Ireland are offering weekly day trips to the store from Dublin and Athlone so customers can take advantage of the cheaper food prices in Northern Ireland.

The bus runs are believed to have contributed to a 10 per cent rise in the sales of goods in euros over the past year.