Ford is planning to reduce the list prices on all medium and small cars in its range, and slash dealer discounts at the same time.
Nigel Sharp, managing director of Ford in the UK, claimed that a combination of inflated list prices and large dealer discounts was "causing confusion for consumers" and that Ford wanted to "make the whole purchase process more transparent".
Ford is hoping to redress the balance in its pricing, following steep price hikes during the recession.
The Ford Fiesta, the firm's biggest-selling model, is to be available from £9995 in Studio spec, bringing it closer in price to its biggest rivals, the Volkswagen Polo (from £9790) and the Vauxhall Corsa (from £9995).
The Fiesta had previously been available from £11,645, although dealer discounts are said to have slashed as much as £1500 from this figure.
Similar reductions have been applied to the Focus, Ka and Kuga, with average price cuts of around 11 per cent. Ford had already made similar reductions on its larger models, the Mondeo, Galaxy and S-Max, earlier in the year.