Up to 100 officers could be employed by Securitas to patrol the streets of Manchester in a pioneering deal with local businesses.
They will wear stab-proof vests, cameras to gather evidence and have radios on their utility belts, just like constables.
The security guards will visit shops up to eight times a day and respond within 90 seconds if staff sound a panic alarm.
It is hoped that one team will patrol shopping areas during the daytime while another will keep an eye on bars and restaurants at night.
And although those in the "retail support unit" will not have the power of arrest, eventually they could be allowed to give out on-the-stop fines for offences such as littering.
They could even provide evidence for court cases and bolster the presence of police if last summer's riots were repeated.
The guards, who will undergo criminal record checks, will not have a direct line to police but will be able to keep in touch indirectly through a radio system called "storenet".
But the scheme has been described, by the organisation that represents rank-and-file officers, as a further example of the "creeping privatisation" of policing in England and Wales designed to fill the gap created by 20 per cent budget cuts.
It comes after the private firm G4S signed a £200million deal with Lincolnshire Police to build and run its own police station, which could also see civilian jobs cut.
West Midlands and Surrey forces invited companies to bid for £1.5billion worth of services but in the face of fierce opposition they put the plans on hold last month.
Ian Hanson, chairman of the Greater Manchester branch of the Police Federation, said of the new security patrol scheme: "This is the sort of function that teams of police officers have performed for years until the cutbacks.
"This is creeping privatisation and the public need to wake up to it before it's too late. Police officers need to be out there detaining people rather than withdrawing from the front line because of government cuts.
"We have been warning for some time that policing is being sold off to the highest bidder. The public and the retailers are being forced into this because GMP quite simply hasn't got the resources to do what we used to do routinely."
He also raised questions about the quality of the recruits, a dozen of whom are involved in the scheme to start with.
Mr Hanson told the Manchester Evening News: "These are no more than security guards performing a quasi-policing role. What training have they been given? What background checks have been carried out? Who are they answerable to? Ultimately, police officers are answerable to the public. These people won't be."
Councillor Pat Karney, Manchester City Council's lead member for the city centre, said: "They urgently need to come and see us about the detail of these plans. Security of people and premises is one of our top priorities. We have to make sure the right image of Manchester is projected. We are always open to new ideas but we need to protect the image of the city and made sure it is a welcoming place."
Paul King, Securitas area director for Greater Manchester, insisted: "We are very excited about this innovative new project, which I must stress will not replace traditional policing but rather complement it.
"Our officers will be highly professional and provide a re-assuring presence on the streets of Manchester. They won't be there to arrest people or anything like that. They will be providing a service for the retailers and be a reassuring presence on the streets of the city."