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Richard Desmond, the high-profile and opinionated newspaper proprietor, has not been shy in stating his ambition to see the Daily Star overtake the Daily Mirror to become the second-biggest-selling tabloid behind The Sun.

National newspapers' recent woes have been well documented: falling circulations, a failure to commercialise digital formats and an overreliance on promotions and giveaways have led some to sound the death knell for the industry.

Yet Desmond's downmarket Daily Star is shining bright amid the gloom. Its circulation of nearly 825,000 copies a day means it now outsells The Times and The Guardian combined.

Following a reduction of its cover price to 20p in 2008, the Daily Star is to slash it again to 10p in an attempt to lure some of the Daily Mirror's 1.3m readers. The gap between the papers is narrowing fast: 10 years ago, when Desmond purchased the Daily Star, it sold around 1.5m fewer copies than the Daily Mirror.

The price cut will come into force next month when the paper will sell at half the price of The Sun in London and a significant discount to the 45p Daily Mirror. The strategy is a risky one, sacrificing about £80,000 in cover-price revenue a day with no guarantee that the shortfall will be covered by an increase in advertising income.

History, meanwhile, offers no balm.

In the mid-90s, Rupert Murdoch's ruthless slashing of The Times' cover price to as low as 10p, in an effort to drive out competition, prompted a rebuke from the Office of Fair Trading.

'Price wars, especially at this low level, unfortunately serve only to undermine the perceived value of a newspaper,' says Hugo Drayton, former managing director of the Telegraph Group. 'The London Evening Standard is making a success of its free status at a time when many online newspapers are revisiting pay walls and charging for access. Temporary price cuts, however, have not delivered lasting benefits to papers - they are destructive.

'Desmond has publicly bemoaned his boredom and impatience for a new project,' he adds. 'This move may be a product of that restlessness and desire to make mischief, as well as a real ambition to overtake the Daily Mirror.'

Should the Daily Star's discount translate to a further leap in circulation, then it will be able to demand higher advertising rates - a tactic that it has already been employing.

Dennis Perks, trading manager at media agency Total Media, says: 'Northern & Shell (the Daily Star's owner) has invested heavily in the title, while The Sun and Daily Mirror aren't really doing anything. The Daily Star is already playing hard-ball with agencies and walking away from business, which is a good sign for its publisher.'

One potential stumbling block to a hiking of ad rates is the preference of some major tabloid advertisers, such as the supermarkets and utilities and telecoms companies, for annual deals. A sudden demand for a higher rate could compromise these lucrative long-term relationships.

Yet such issues could be deemed inconsequential if Desmond, whose media empire also includes the Express titles and OK!, confirms plans to plough £1bn into an expansion drive.

According to some sources, part of the funds should be dedicated to revamping the Daily Star Sunday, which sells fewer than 350,000 copies.

Paul Thomas, former head of press at media agency Mindshare, believes the Sunday title needs attention, but says there is a more fundamental problem that could compromise Desmond's growth plans.

'The problem with the Daily Star is that it is not read in the home. It is not a weekend product as people don't spend that long reading it,' he explains.

The Daily Star's recent circulation growth has been achieved largely by imitating the layout of The Sun, including its own version of the Page 3 models, but without the big-ticket columnists. It has also advertised on TV, a strategy agency heads believe it will have to ramp up if Northern & Shell is to maximise the benefits of the price cut.

Whether the Daily Star's arch-rival will respond is debatable. Trinity Mirror, publisher of the Daily Mirror, has publicly stated it will not follow suit with its own price cuts.

Drayton, however, says: 'I doubt Trinity Mirror will act immediately, but if the assault is prolonged and the Daily Star does make inroads, the Daily Mirror may be forced to respond.'

1978: Daily Star is first published from Manchester
2002: Daily Star Sunday launched
2009: Daily Star publishes its 10,000th edition
2010: Daily Star's audited circulation figure for April is 823,025