The BBC has had no increase in real terms for a decade. In recent years it has faced painful restructuring and fast-increasing competition from satellite and cable broadcasters.
Mr Birt, attacked by insiders who fear the BBC's public service character is being eroded, made his appeal for more money in strong public-service terms, warning of the dangers of the globalisation of culture. He suggested no figures yesterday, but insiders suggest he wants to see the licence fee rise from its current pounds 89.50 to well over pounds 100 within two years.
BBC staff hinted that a rise of as much as 6-8 per cent per year might be requested. After that the BBC would hope to see an increase equal to the rate of inflation plus a "low single digit figure" each year over three to five years.
The increase would add pounds 150m-pounds 170m to the BBC's pounds 1.7bn income from next year, which would be used to develop the core channels, BBC1 and BBC2.
Speaking at the opening of the Edinburgh International Televison Festival, Mr Birt said that the higher licence fee was vital if the BBC was to meet the "formidable financial challenge" of preparing for the digital age and to help see off the threat of an Americanisation of British cultural life.
"Neither a new leap forward in efficiency, nor a vigorous drive to increase our commercial revenue, will be enough... The most effective means of countering the risks of the globalisation of culture and of declining standards is by sustaining publicly-funded broadcasters."
He added: "If the BBC is to remain as creative and dynamic an institution in the 21st century as it has been in the 20th century ... then at some point in the future - and for the first time since 1985 - we shall need a real increase in the level of the licence fee."
The licence fee has remained effectively frozen since 1985. In 1991, Margaret Thatcher's government set the universal, compulsory levy at 3 per cent below the rate of inflation, in a move viewed as punishment for alleged anti-Tory programmes on the BBC. The present Government is set to revisit the licence fee issue this autumn.
"The miracle is that in recent years, we have not only funded these rising costs on a flat income but have enriched and increased the volume of BBC services," Mr Birt told delegates in his James MacTaggart Memorial Lecture.
Sharp cuts in the operating budget of more than 16 per cent over the past three years, along with a jump in commercial revenues from programme sales, publishing and subscription television, helped finance the launch of Radio 5, the extension of Radio 3 to a 24-hour service and a reduction in the number of repeats on the main channels.
But Mr Birt said the costs of introducing new digital services, including a 24-hour news channel and extra "complementary" programmes to improve schedules could not be met solely through cost savings and a planned tripling of commercial revenues.
He said the rising costs of sports rights and spiralling fees for talent would combine to make it difficult for the BBC to compete for quality programmes.
He took a swipe at BSkyB, Rupert Murdoch's satellite broadcaster, which will charge pounds 324 a year for a full pay-TV subscription starting on 1 September - three and a half times the BBC levy.
"If the BBC is to maintain its role, then its income will need to rise - as industry revenues expand, as individual incomes grow and as leisure spending increases," Mr Birt said.
But a higher licence fee was not enough to ensure that BBC's digital future, he said. He called on the government to ensure that no single company could control the "gateway" to digitial services.
Murdoch's digital plans, page 6.Reuse content