Amazon has hit back at publishing giant Hachette claiming that its controversial new e-book deal will benefit everyone and save people money. The retailer, which is behind the popular Kindle e-reader range, has been squabbling with publishers for months and claims that they are charging too much for e-books and colluding to increase prices.

Last week a group of over 900 authors, including Philip Pullman and Stephen King, published an open letter in The New York Times calling for an end to the dispute. The authors claim that Amazon is "boycotting Hachette authors" by slowing down delivery times in an attempt to force through a deal. The group of authors said that no bookseller should stop people from being able to order the books they want.

Details of the new contract aren’t clear, but Amazon is attempting to set e-book prices at less than $9.99 (£5.95) rather than the current $14.99 (£8.93). The retailer has compared the impact of e-books to the arrival of paperback books 70 years ago and said that publishers also needed to share more of their profits with authors.

"Hachette has already been caught illegally colluding with its competitors to raise e-book prices," Amazon said . Best-selling author Douglas Preston accused Amazon of "thuggish behaviour" in its attempts to secure a deal.

As part of the new deal Amazon will reportedly give publishers 70 per cent of the take on ebook sales and expect them to pass on half to authors. Amazon will itself get a 30 per cent share of all e-book sales. The retailer is demanding that all publishers cap prices at $9.99 to increase sales, something that it says Hachette is unwilling to do.

Hachette’s CEO Michael Pietsch denied such claims and said that his company sells more than 80 per cent of its e-books at $9.99 or lower. The company has also refuted Amazon’s claim that the deal is good for all parties, saying the retailer is trying to take more money from publishers, booksellers and readers.

"This dispute started because Amazon is seeking a lot more profit and even more market share, at the expense of authors, bricks-and-mortar bookstores, and ourselves," Pietsch said.

The war of words between Amazon and Hachette has failed to recognise the dire situation facing many authors. Recent figures in the UK showed that on average professional authors made just £11,000 a year.

"Amazon says that it only seeks a lower price for its customers but, as we have seen with supermarkets and milk production, constantly driving down prices can mean that producers can no longer create their goods economically," said Nicola Solomon, chief executive of the Society of Authors .