Islington’s tough new licensing regime is facing its first major test – as a shop caught with the borough’s biggest ever stash of dodgy booze bids to get its 24-hour licence back.

The new “saturation zone” policy, which came into force on February 1, is designed to make it much harder for businesses to get licences in areas where there are already plenty of alcohol sellers.

It has been described as a “virtual ban” on new bars and off licences by Islington Council’s crime chief Cllr Paul Convery.

Now the policy is set to be put to the test when Day ‘n’ Night Supermarket in Finsbury goes before a town hall licensing committee on Tuesday next week.

The store, at the junction of Old Street and Whitecross Street, was caught with hundreds of bottles of illicit wine and vodka when trading standards officers swooped in September last year.

It surrendered its 24-hour licence two weeks later – but now managers have applied for it to be restored.

Cllr Troy Gallagher, a Labour member for Bunhill Ward, said: “There’s no point having a saturation zone in place if we’re going to allow them to carry on. This is the reason it was put in place.

“I’m keen to see that the saturation zone is enforced. Bunhill has a high density of licences and we’re at breaking point. Enough is enough.”

Trading standards found 376 illicit bottles of wine and 168 litres of vodka when they visited in September – the most alcohol ever seized by the team in a single raid.

Cllr Gallager added: “When you get a licence, there is a level of trust and responsibility and anyone who breaks that has to face the consequences. There has to be a no tolerance attitude.”

The saturation zone covers all of Islington’s nightlife hotspots, including King’s Cross, Upper Street and the whole of Bunhill ward. The presumption is that new applications will be refused in these areas.

A map produced by police shows that there are 58 licensed premises within 500 metres of Day ‘n’ Night.

In a letter to the council, Det Ch Insp Steve Wallace, of Islington Police, wrote: “In an area that is already saturated with licensed premises, it is just not sustainable to keep increasing the number of people on those streets after midnight. I would ask that the licence application be rejected.”

New Day ‘n’ Night manager Muzahir Ghalloo said: “I hope we can get the licence back for 24 hours. Over the last many years it has been 24 hours, and there were no issues before that [incident in September].

“The management has changed since. That related to the previous owner and was nothing to do with me.”