The supermarket giant made the announcement in its preliminary financial results for 2006/7 on Tuesday where it revealed record profits of £2.55 billion - or £4,800 a minute.
Tesco aims to reduce packaging by a quarter on branded and own label products by 2010 and has also introduced a labelling scheme to aid recycling.
All of its packaging will be labelled according to whether it can be re-used, recycled or composted and if neither of these three are applicable this will also be labelled.
Tesco is one of 13 major supermarket chains to sign up to the Courtauld Commitment established almost two years ago. Initiated by WRAP, the agreement was aimed at halting the growth of packaging food waste by 2008.
It also aimed to reduce the amount of food packaging that ends up in household bins by 2010 and find ways to reduce food waste.
WRAP chief executive Dr Liz Goodwin said: These are ambitious targets from Tesco but they are just the type of challenging action that WRAPs Courtauld Commitment was designed to achieve.
We will be pleased to continue to work with Tesco and their suppliers as they develop their plans to deliver these changes. We are extremely encouraged to see leading retail names making a commitment to reducing the environmental impact of packaging.