The papers will be the first UK titles to adopt a mid-size "Berliner" shape, which is used by many European papers including Le Monde in France.
Unlike its broadsheet-turned-compact rivals, The Independent and The Times, The Guardian will go straight to compact. The bold switch is partly a financial one as the newspaper group seeks to avoid the heavy costs involved in publishing twin editions.
For The Times, the cost of producing two editions is taking a heavy toll on profits with a redundancy programme now making swingeing cutbacks.
The Guardian's director of corporate affairs Shaun Williams confirmed the plans to Brand Republic today, insisting that they were part of a "long-term strategy" for the paper and that the paper had made "no secret" this year of its plans to go compact. Staff on the papers were briefed of the plans last week.
However in February, The Guardian's editor Alan Rusbridger said that the paper would not be launching a tabloid version, despite the circulation successes of The Independent. Earlier in the year, marketing director Marc Sands also rubbished claims that the paper had produced dummies for a tabloid edition dubbed "Guardian Lite".
Plans are likely to certain to see investment in new printing presses at West Ferry, where 60% of The Guardian's newspapers are already printed.
According to the latest set of ABC figures, The Guardian's average circulation is down 6.06% year on year to 389,400. The Observer's average circulation was also down 1.24% to 445,943 in the same period.
Meanwhile, The Independent, the first broadsheet to take the compact plunge last September, is enjoying circulation increases of almost 14%, at 261,009, narrowing the gap between it and long-time centre-left rival The Guardian.
The move could intensify pressure on the new Barclay brothers-owned Telegraph Group, which said that it was putting any tabloid plans on hold until the sale to the Barclays had been completed. The Daily Telegraph was down 1.95% in the ABC figures to May, while The Sunday Telegraph was down 4.18%.
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