Woolworths has risen from the ashes after a surprise deal with Shop Direct, the owner of Littlewoods, to revive the failed high street retailer in cyberspace.

A month after the shutters came down on the last Woolworths store, Shop Direct, owned by Sir David and Sir Frederick Barclay, is understood to have paid Deloitte, the administrator, between £5 million and £10 million for the Woolworths brand name. Shop Direct refused to comment on the price.

Woolworths, which was famed for its pick'n'mix confectionery, is to reopen as an online store in the summer. Shop Direct plans to focus its Woolworths offering on children's clothes and gifts, moving the business away from general merchandise and homeware. Ladybird, Woolworths' children's clothing range, was also included in the deal and its clothes will be sold through some of Shop Direct's other catalogue and online channels, which include Kays and Littlewoods.

Mark Newton-Jones, the chief executive of Shop Direct, said that Woolworths was an important part of Britain's retail heritage. “The fondness there is for this business is underlined by the reaction we have had this morning,” he said.

Within hours of the announcement yesterday, 20,000 customers had registered with the woolworths.co.uk website, where they were encouraged to suggest what they would like the store to sell.

Mr Newton-Jones said: “There have been lots of comments saying: 'We don't expect you to sell ironing boards or washing-up bowls.' That never sat comfortably with them.”

The Shop Direct deal has scuppered plans by Tony Page, the former commercial director of Woolworths, to rebuild the retail chain as a bricks-and-mortar store.

Woolworths was forced into administration in December after amassing debts of £385 million. Its collapse, which sent shockwaves through retailing, left 27,000 staff out of work and triggered the collapse of Zavvi, the music retailer, which relied on EUK, Woolworths' distribution division. The last of the Woolworths chain's 807 stores closed soon after Christmas.

Shop Direct cut 1,150 jobs last week, closing a call centre, as it transforms itself into a primarily internet-based retailer.

Times Recommends

• ‘Lame duck’ fear for FSA as chief quits
• Storm over bailout of EU's most ailing economy
• Northern Rock to drop 100% savings guarantee