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It would follow the models of hugely successful streaming services such as Amazon, Netflix and Disney Plus. Instead of TV owners being forced to pay £159 a year, or face the threat of prison, the licence could be replaced with a taxpayer-funded subsidy, with a rump of loyal viewers paying a voluntary subscription for services like news and current affairs, arts programmes, sport and popular shows that continue to draw millions, such as Strictly Come Dancing.

Under plans being drawn up by the Government the licence fee is set to be abolished in 2027, with the BBC’s funding frozen for the next two years. The move will force the broadcaster to axe jobs and become self-reliant, rather than be propped up by taxpayers.

An annual licence is a legal requirement to watch live television and access iPlayer services. The cost will remain £159 until 2024 under the current deal. But in the future viewers are likely to have to pay a Netflix-style subscription for news, current affairs and arts programmes.

The solution would force the BBC to become commercially competitive and win back public support, especially among the elderly who now have to pay to watch TV for the first time in more than two decades after their free licence fee concession was removed.

By 2027 it is expected that Britain will have universal coverage of superfast broadband, allowing everyone to watch TV over the internet and “switch off” the BBC if they do not require its services. Netflix costs as little as £5.99 a month, while Amazon Prime Video is £7.99.

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