The move will see it take on Tesco's city centre Metro and Sainsbury's Central brands. Initially, the food and drink sections in 24 Woolworths stores will be converted to display a range of food products under the Spar name.
For Woolworths, the move should allow it to grow its market share and allow Spar to compete with the supermarket majors as they continue to extend the number of smaller-format stores they operate.
It follows a disastrous Christmas for Woolworths, which issued its second profit warning last month since its demerger from the Kingfisher group last year.
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