The retail giant, which last week surprised the City with better than expected Christmas trading results, has finally decided to hold a formal pitch for its above-the-line business following months of speculation.
The decision places its 17-year association with Bates UK under threat.
Octavia Morley, Woolworths marketing director, confirmed that comedian Paul Kaye was being dropped from its brand advertising only eight months after he agreed to front a £20m relaunch.
Kaye sparked controversy last year when, in an interview with a national newspaper, he called himself a "c***" for appearing in Woolworths' ads.
Although the company stood by him at the time, the incident caused considerable embarrassment and is certain to have been a factor in Woolworths' decision to drop him.
Morley said she had drawn up a list of London agencies that will present to her and head of brand communications Mark Trinder over the next few weeks.
Competing agencies are believed to include Bartle Bogle Hegarty, WCRS, Delaney Lund Knox Warren, McCann-Erickson, Leo Burnett and TBWA/London, as well as Bates UK.
"We are looking to refresh our brand identity in the year ahead and reinvigorate it in the eyes of our customers. It is therefore essential that we consider all the resources and creativity available to us," said Morley.
Woolworths' deal to replace Pepsi as the headline backer of the Network Chart Show, which is worth £8m over two years, will involve the Woolworths Hit 40 UK being broadcast across a national network of 96 radio stations from February 2.
The tie-up with Capital Radio Group's Commercial Division is designed to strengthen Woolworths' lead in the music and entertainment retail sector, as well as to give the Network Chart a strong retail presence for the first time.
Hit 40 UK is the UK's most listened-to commercial radio programme, drawing an audience of 4.2 million people every week. Its listener profile is 15- to 34-year-olds, with a heavy bias toward the 15 to 24 age group.
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