Britain's biggest supermarket chain reported that like-for-like sales at its UK stores jumped by 4.9 per cent during December and early January.
Tesco saw a 35 per cent surge in sales of champagne, with toys, electrical goods, and its Finest food range all performing strongly over the last six weeks.
Chief executive Sir Terry Leahy said: "We've delivered a very strong performnace over the Christmas and New Year period. It was a great Christmas for Tesco customers with an excellent seasonal range in store and online.
“The Tesco team delivered a great shopping trip for customers and I'd like to thank all our staff and also our suppliers for their tremendous efforts, particularly during the freezing weather."
Rival chain Sainsbury's also beat City forecasts last week with a 4.2 per cent rise in like-for-like sales, while John Lewis and House of Fraser both reported their best festive sales ever.