Ivan Fallon, chief executive of Indepndent News & Media, called the move a "natural development" for The Independent on Sunday.
"This is another first for the Independent papers, building on the compact revolution we started two years ago in the daily market. In many ways, our latest move is a natural development for the company. We had always intended to turn the Sunday into a compact newspaper, and conditions are now favourable to do so," he said.
The new-look Independent on Sunday will consist of a 104-page main news section including comment, news review and sport. The paper will include a new 24-page pull-out travel section, separate business section, and two magazines, the ABC arts review and the award-winning Sunday Review.
The relaunch will be backed by a national television and radio campaign, through Walsh Trott Chick Smith, with media through Walker Media.
In the latest set of ABCs, The Independent on Sunday's circulation fell by 7.5% year on year to just over 200,000 copies an issue.
IN&M is hoping the Independent on Sunday will go the same way as its daily sister title, which boosted its falling circulation by 4.76% after turning tabloid.
Rival title The Observer, which saw sales drop by 1.3% in August to 425,750 copies, is expected to re-launch in the Berliner format in early 2006.
The Sunday broadsheet market has experienced a drop in circulation all round with the only exception being the Sunday Times, which was up 2.5% to 1.36m.
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