According to The West Australian, egg farmers have labelled Coles a "dictatorshop" for cuts which resulted in the price of a dozen Coles-brand free-range eggs (700g) dropping from an average $4.89 to $4.

The cuts were not sustainable and would hurt primary producers, says the Australian Egg Industry Association, which has joined forces with dairy farmers in a battle against the supermarket chain.

But as with the ongoing war over milk prices, Coles insists it is doing the right thing by customers and farmers and is fully absorbing the cost of the cuts.

Coles have paid most suppliers a cost increase for home-brand eggs and will continue to accept genuine cost increases, reads a statement released by the supermarket.

It defended the move as being the people's choice, with a clear majority saying they would buy free-range if they were cheaper.

The egg association also attacked Coles for plans to phase out its home-brand caged eggs by 2013, saying it was the most cost-effective form of egg farming.

"You have to wonder how that benefits consumers," the association's executive director James Kellaway said in a statement.

But Coles said on Monday all other branded caged eggs would remain on the shelves.

"Coles will continue to offer customers a full range of branded eggs so customers have a choice," the Coles statement says.

It has also promised to work with suppliers to ensure the price of eggs stays low.