The most significant reduction by BT is a 20 per cent cut in the price of all calls to the US and Canada. It means a five-minute daytime call to the US falls from pounds 1.49 to pounds 1.19, or pounds 1.07 including the Friends and Family discount scheme.
Other reductions include cuts of between 10 per cent and 20 per cent on calls to Germany and France, while calls to Australia and New Zealand fall by 10 per cent. Calls to Sweden plunge in price by 37 per cent.
The cuts narrow the price gap with Mercury and the cable companies and are likely to go some way to meeting the challenge from a growing band of bargain operators.
Analysts said the move was in response to the UK's decision to open up the market in international traffic, previously a duopoly between BT and Mercury, to 44 operators.