Ian Taylor, Science and Technology Minister, said he aimed to begin issuing licences to other service providers from July.
Among the companies expected to apply for licences to provide services from Britain are AT&T, the giant US telecom operator; Energis, which is owned by the National Grid; Sprint, another US long-distance operator; and Colt, which provides business telecom services to the City.
The market being opened up mainly consists of services to Europe and is worth an estimated pounds 200m-pounds 300m a year. The bigger and more lucrative long-distance markets such as transatlantic are subject to bi-lateral agreements between national telecoms operators and are not covered by the liberalisation announced yesterday.
The move to end the BT-Mercury duopoly was foreshadowed in a consultative document in March and is in line with a European Union directive that most member states liberalise intra-EU telecommunications services by 1 January, 1998.
Mr Taylor said liberalisation would boost competition, lead to lower prices and make the UK an attractive location for inward investors requiring cheap, high-quality telecoms services.
BT said that any adverse impact in the short term would be offset by increased opportunities in the medium term.