The future shape and size of the BBC was called into question by the Government last night when Tessa Jowell, the Secretary of State for Culture and Media, announced a White Paper on the future of the corporation.
Ms Jowell said it was "time to look afresh at the shape and purposes of the BBC". She vowed to make the organisation justify every area of its operation.
"We need to ask ourselves what we want and expect the BBC to deliver, what range of services it should provide, how it should be positioned in relation to the market, how it should be funded and regulated; and whether it delivers good value for money," she said.
Her move, announced to senior broadcasting executives at the Royal Television Society convention in Cambridge, is being made at a time when the BBC is under attack as never before.
The Hutton inquiry has left the corporation vulnerable to attack over journalistic standards and governance - an opportunity that has been seized with relish by many newspapers, particularly those whose proprietors are Rupert Murdoch or Lord Black of Crossharbour.
Ms Jowell also announced the appointment of an independent adviser, Lord Burns, who was permanent secretary to the Treasury from 1991-98, to help to draw up the White Paper.
The document, which will be published after consultation with the media industry and the public, will be presented to Parliament "well before" the BBC's current charter runs out in 2006, "so that the BBC and the industry have time to adjust to any change".
The Culture Secretary promised "one certain outcome will be a strong BBC, independent of government".
But her review is bound to ask difficult questions on whether the BBC has strayed too far from its public service remit into commercial areas.
The BBC came under fire last week after it announced the launch of 10 new magazines on subjects as diverse as parenting and pop music. Competitors said the organisation was abusing its position and could drive some rival titles out of business.
Tony Ball, the chief executive of BSkyB, recently said that the corporation should be forced to sell its most popular programmes, such as Holby City and Have I Got News for You, to commercial channels, leaving it to concentrate on programmes that would not be provided by profit-seeking rivals.
Yesterday's move appeared to be an about-turn for Ms Jowell, who got into hot water last year when she seemed to pre-empt a decision on the renewal of the BBC's charter by saying that the chances of the licence fee being scrapped were between "improbable and impossible".
Her advisers are now making clear that the survival of the fee is no longer a foregone conclusion. But industry observers doubt she has changed her mind about the licence fee being the best way to the finance the BBC.
A change of government could alter that: the Conservatives have launched their own review of the licence under the former Channel 5 chief executive David Elstein, who has publicly called for the fee to be scrapped.Reuse content