The UK sugar processor said it created Sugarpaste, a ready-to-use, smooth-finish icing paste, in response to market demands for healthier products.
"Last year we asked craft bakers and cake decorators what their ideal sugarpaste would be like," said Paul Farrow, British Sugar's milled product manager.
"We listened and then set to work to produce our newest product, the specially blended Icecraft Sugarpaste."
Health-conscious consumers are increasingly turning away from hydrogenated fat because of concerns over trans fatty acids, found mainly in partially hydrogenated vegetable oil.
British Sugar said it had not compromised on taste or quality in creating the new product.
"In independent sensory tests, sugarpaste made with Icecraft icing sugar produced the whitest sugarpaste and was significantly smoother than those made from standard icing sugar," claimed Lindsay Mather, British Sugar's technical development manager.
Sugarpaste is one of a number of products British Sugar are rolling out to meet the demand for healthier foods.
This year the company launched a line of moisture-resistant sugar that is free from trans fat.
It also released Classic, a pure golden syrup containing no added flavours or colourants.
Trans fats are traditionally used in bakery to extend shelf-life and stabilise flavours.
Recently however there has been public concern over the use of these fats, which are linked to raised blood cholesterol levels and the increased risk of heart disease.
In the UK, the Faculty of Public Health and Heart of Mersey (HoM) recently urged the food industry to eliminate trans fat altogether, and researchers at Oxford University argued that food labels should list all fats to help reduce heart disease.