WOOLWORTHS has caved to consumer backlash and dramatically reduced prices at one of its newest boutique supermarkets in the heart of Sydney.

It emerged yesterday that the 900m2 Woolloomooloo store, which opened last week, was one of the most expensive carparks in the country if not the world.

After giving shoppers the first hour free, Woolworths was charging $65 for parking between one to two hours, $95 for two to three hours and $125 for more than three hours in its small 25 space underground car park off Riley St to deter non-shoppers using it as a long term car park.

Woolworths has now slashed it rates and will give shoppers their first 90 minutes free, charge $25 for parking up to two hours, $60 for two to three hours and $90 for more than three hours.

The sign with the original prices at the carpark entrance was taken down this morning.

A Woolworths spokesman said the free first hour was the only “free parking" in the Woolloomooloo area that they "were aware of" and the parking was strictly intended for customers.

“We have extended the free parking period to one and a half hours, which we believe is a fair amount of time for customers to do their shopping and enjoy a cup of coffee,” he said.

“For drivers who choose to stay longer in the car park, the rates will be clearly displayed.”

Several shoppers the Telegraph spoke to outside the store thought the original rates were exorbitant but others did see the need to have a deterrent price to stop the carpark being used by non-shoppers.

Linda Junee, who works nearby the store, said she thought the original prices were fair but had told visitors they should avoid the carpark because of the rates.

The carpark was only being used by a handful of shoppers and Woolworths isn't yet charging for the yet to be completed carpark.

The new prices put the carpark in the same price range as the Secure Parking carpark at No 1 Martin Place which charges $33 for 30 minutes to an hour parking and $89 for more than three hours.

