Making a crisis out of drama: The battle Dyke must fight in war with ITV

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The director general of the BBC, Greg Dyke, has a battle on his hands of the most dramatic kind if he is to wrestle the public away from ITV in the bitter ratings war.

BBC drama is increasingly perceived as lagging woefully behind ITV and is in need of a huge injection of cash, or new talent, or some other magic ingredient.

Mr Dyke's problem is that matters are getting worse, not better. The corporation's drama department is wincing over the ratings failure of its gothic monstrosity Gormenghast and the mediocre performance of middle-of-the road series such as Sunburn, Harbour Lights and Playing the Field.

It is also being roundly beaten on the sheer amount of drama that it produces. ITV's drama budget is now a whopping £253m, against £152m for BBC 1. The £101m difference, not surprisingly, shows up onscreen. ITV boasts of having a "drama special" about every 10 days - often with big stars such as Robson Green, John Thaw or Ross Kemp. BBC executives are, obviously, envious.

Last week, the controller of BBC 1, Peter Salmon, went so far as to make a public plea for more money for drama, expressing the fear that unless he got extra cash, BBC 1 would start to look like a factual channel.

Mr Dyke is aware that "something must be done". And that something needs to happen sooner rather than later, because of a new development at ITV. A few months ago, the commercial network was delighted when its adaptation of Oliver Twist got bigger audiences than the BBC's period drama Wives and Daughters when the two were scheduled against each other.

ITV executives had taken on the BBC in its core territory - costume drama - and won. That success has given the network an appetite for more

On Wednesday, ITV bosses will announce a massive new drama portfolio with a number of costume dramas in the line-up. An expensive production of Nicholas Nickleby is, they believe, the jewel in the ITV crown. The programme has been commissioned and is currently being cast.

That will be followed by an adaptation of Thomas Hardy's The Mayor of Casterbridge (a project the BBC, it is said, was also keen on), and three plays by Hollywood's hottest writer - William Shakespeare. New adaptations of Othello, King Lear and Hamlet are on their way.

The man behind the new programmes is ITV's Nick Elliott - who is regarded as the most successful drama commissioner in Britain. Over the past year he has managed to secure a massive 36 per cent increase in the amount that ITV is spending on peaktime drama and, he confirms, he is now investing in a team of ITV "super-actors" to pull in ratings.

David Jason and John Thaw are the team's backbone. They have recently been joined by Ross Kemp, poached from BBC's EastEnders, and Amanda Burton, star of the successful BBC series Silent Witness. Robson Green has also been recruited and Mr Elliott says he will soon sign up one more actress to complete the team.

It is not surprising that the television industry is buzzing with rumours that Mr Dyke would like to poach Mr Elliott. The two men get along well, and have been dining together of late. Mr Elliott and Mr Dyke go back a long way. They are both, like Sir John Birt and the BBC chairman, Sir Christopher Bland, former high-flyers at London Weekend Television - in industry terms, part of the LWT mafia.

The snag is that Mr Elliott is said to be wary of the BBC. He went there a few years ago, persuaded by his friend Sir John. He was immensely successful, presiding over the launch of Ballykissangel, Hetty Wainthrop Investigates and Silent Witness. But he lasted months rather than years. Friends say he did not enjoy the relentless in-house politicking and grinding bureaucracy. Mr Dyke will have his work cut out if he is to persuade Mr Elliott to give the corporation a second chance.

Another element in the equation is Alan Yentob - the BBC's director of television. Under Mr Dyke's new management structure, Mr Yentob is expected to be moved to a more "creative" role. The veteran BBC boss, insiders say, may regard this as a demotion. It might also put him in charge of the drama problem - a position perceived as inconsistent with any idea of Mr Elliott returning to the corporation.

In the meantime, Mr Elliott is busy strengthening the ITV drama armoury further still. He has up his sleeve a television drama called Cor Blimey, which will be based on the love affair of Barbara Windsor and Sid James and feature a cameo appearance by Windsor.

He is also about to reveal a drama, Little Bird, which will star Amanda Burton and be loosely based on last year's news story of a couple who ran away with their foster children to escape social services. Another drama, Fat Friends, will follow the varying fortunes of a bunch of women who belong to the same weight-loss class.

This Easter, ITV is expecting a huge audience for its new adaptation of E Nesbit's The Railway Children, which will include Jenny Agutter as the mother of the girl she played in the original film.

It would be wrong to suggest that the BBC does not have its successes. Holby City is now beating ITV's The Bill in the ratings. Groundbreaking dramas such as last year's Warriors have picked up prestigious awards, while Cops is proving a critical success in the United States. However, there is the matter of the £101m disparity in budgets. It is not an easy sum for Mr Dyke to find - even if he does sack a lot of managers and rationalise the corporation's many duplicate news services.