AOL and Supermarkets Online say they've worked out a foolproof way to distribute coupons that cannot be counterfeited and are cheaper to distribute.

The pact marks the first major national distribution of coupons outside of their usual Sunday newspaper inserts or junk mass mailings.

Under the terms of the deal expected to be announced today, a user on AOL and its Digital City local guides can download a variety of deals offered by manufacturers and take a printout of picks to his supermarkets.

On the printout the bar code is scanned at the checkout counter, for one-time use only.

The checkout counter then prints out coupons picked by the user, who will be able to use them at his next visit to the store.

"Everyone is pleased with the system," Supermarkets Online co-founder Mike Scroggie said.

"Supermarkets can track the data, and manufacturers know exactly who got their coupons," he added.

AOL will collect several million dollars a year to make Supermarkets Online an anchor tenant on AOL's food area locations.

Scroggie said the food giants such as Kraft General Foods, Kelloggs and Del Monte like the idea of using the web to send their cents-off and special coupons to consumers.

"It's 26-percent cheaper for the manufacturers to distribute their coupons this way," said Scroggie, whose company is a subsidiary of Catalina Marketing.

Postal charges have been rising steadily, and newspaper-insert fees also have inched upwards in past years.

One of the most frustrating costs for packagers, however, is coupon fraud, which costs the food industry millions of dollars each year.

Unscrupulous dealers and phony retail fronts will collect coupons by paying a fraction of their value - sometimes to volunteer groups clipping coupons as fund-raisers.

The fraudsters then submit the coupons to manufacturers for their rebate checks - without having sold any merchandise.

Currently, just 45 of the top 500 packaged good companies use Supermarkets Online to distribute coupons on its web page (www.valupage.com).

"In two years, you'll see almost all major packaged goods companies distributing their coupons this way," Scroggie said.

He said that more than 80 percent of households use coupons, including households wired for the Internet.

"There's a great demand on the 'Net for coupons," he said.

Meanwhile, AOL's Digital City took another growth step yesterday with a deal to let users of MCI WorldCom's Internet service access all 60 city guides.

Digital City packages interactive guides of local news, community resources, entertainment, classified and commercial ventures.