A senior source in Cable and Wireless, Mercury's parent, said the company hoped to lure millions of customers to the service, which is regarded as a key factor in linking more homes into the main Mercury fixed-link network.
The launch could spark a price war in mobile telephony. Cellnet and Vodafone recently launched lower-cost versions of their services in an attempt to reach the man in the street.
These offer lower monthly subscriptions but higher call charges than existing cellular telephone services. But they are still much more expensive to use than traditional telephones.
Cellnet and Vodafone also plan to launch further new services this year which, like the Mercury system, will be digital and will make eavesdropping impossible.
Mercury's so-called Personal Communications Network, a joint venture with US West, is costing about pounds 240m to launch in south- east England. The speed of expansion into other parts of the UK will depend on its success.
Each customer will have a 'smart card' that can be plugged into someone else's mobile telephone. The telephones will be sold direct from Mercury, in high street retail outlets and from existing cellular distributors.
Mercury's PCN service will be used as part of Cable and Wireless's plan to boost the Mercury brand name in the minds of consumers. Lord Young, the chairman of C&W, is understood to be the driving force behind the brand-awareness strategy both in the UK and overseas.