The £3bn takeover of Safeway by rival Morrisons has moved a step closer after shareholders from both supermarkets overwhelmingly approved the move.

Morrisons shareholders voted 99 per cent in favour of the tie-up, which would create the UK's fourth biggest supermarket chain.

The only remaining barriers are two High Court hearings to sanction the scheme, due in two to three weeks.

Dealing in the enlarged Morrisons company would start on March 8.

Morrisons chief executive Sir Ken Morrison said: "This merger will be a transforming step for Morrisons, enabling us to take the distinct Morrisons formula and our passion and flair for food retailing to customers everywhere in the UK.

"We have very clear and detailed plans for Safeway, and I am confident that we will be able to integrate the two businesses swiftly and effectively."

He said the result endorsed the group's strategy and underlined the benefits for customers, suppliers, employees and shareholders.

Safeway said its shareholders also voted overwhelmingly in favour, but did not give the exact outcome of the vote.

The £3bn deal should combine Morrisons' strength in the Midlands and the North with Safeway's presence in Scotland and the South, giving it a total of 552 stores.

However, it is also likely to mean the loss of about 1,200 jobs, as Morrisons will replace Safeway's head office in Hayes, Middlesex, with an enlarged facility in Bradford.

It is also being forced to sell 52 Safeway stores by the Competition Commission - including six in the North-East - which are expected to be bought by rival chains.

Cost savings and trading benefits to Morrisons worth £215m a year are expected by January 2008.

The completion of the merger in March would come 14 months after Morrisons made its first proposal to buy Safeway.

Rivals Tesco, Asda and Sainsbury's were subsequently blocked from bidding for the group.

Retail analyst Anthony Platts, of stockbrokers Wise Speke, said the finishing line was now in sight for the merger, which he said would be a win-win situation for all involved.

He said: "Former Safeway shareholders will hold shares in a progressive supermarket set to be a major national force with the buying power that brings. Shoppers will see the benefits as well as lower buying cost margins are passed on via lower prices."

Morrisons shares closed up 2p at 221p, while Safeway closed up 2p at 280p.