Lidl is going to take on Waitrose and Sainsbury's - it's going upmarket
Lidl is looking for small and medium-sized sites within the M25. The London Evening Standard reports that many of these will be in what it dubs "Waitrose country" - posh areas such as Chelsea, Notting Hill, and Highgate.
The German supermarket already has a footprint in London, but typically its stores are in mid-to-low market areas.
Lidl and fellow German discounter Aldi have grown hugely in popularity over the last few years. Both offer cheaper, less well-known products than traditional British supermarkets and cut down on costs by having bare bones shops where goods are stacked from the floor rather than on shelves.
Lidl has around 4% of the UK grocery market and turnover last year jumped 21% to £4 billion ($6.1 billion), according to the BBC.
Meanwhile, all Britain's traditional major supermarkets are losing market share to Aldi and Lidl and have been dragged into a price war with them.
Its hitting bottom lines, with Morrisons earlier this week reporting a 5.1% drop in half-year turnover and a 46% drop in profits.
Lidl's UK property director Richard Taylor told the Evening Standard that the new stores in more upmarket areas would remain focused on "value and quality", saying:
The nature of our store concepts mean that customers will be able to carry out their full weekly shop no matter which store they visit, and have confidence that prices will remain consistent across all locations.
David Grey, analyst at Planet Retail, told the BBC: "This is part of an ongoing strategy, with Lidl putting in more premium ranges, more fresh bakery products, more brands, to make it more like a mainstream supermarket."