Waitrose said it would plant vines on its 4,000-acre farm, The Leckford Estate, in Hampshire next year.
Sparkling wine from the vineyard would not hit shop shelves until 2014, the retailer said, revealing its confidence in the long-term future of English wine.
A string of high-profile awards and rising sales have helped to quell jokes about English wine in recent years.
Sales growth is now outstripping supply, according to Waitrose.
Sales nearly doubled at its stores in 2007, said the retailer, which claims to account for 40 per cent of English wine sales via the multiples.
Justin Howard-Sneyd MW, English wine buyer for Waitrose, said he and colleagues were “incredibly excited” by the vineyard plan. "Our customers are really enthusiastic about English wines and we have seen some fantastic quality from Nyetimber, Ridgeview, Chapel Down, Camel Valley and Denbies.”
Several Champagne makers have shown in interest in southern England, which has a similar soil type to the iconic French region but is significantly cheaper.