Big Brother is to be axed after one more series next year, Channel 4 said today.
The broadcaster will end the programme, for which ratings have plummeted for its current series, after screening the 11th series of the "reality" show in 2010.
It is understood Channel 4 has decided not to renew its deal with programme-maker Endemol for Big Brother, which has been a huge revenue-driver for the channel.
Channel 4 has a three-year deal with Endemol, thought to be worth around £180 million, to screen the series.
There will also be one more series of Celebrity Big Brother early next year before the deal ends.
Channel 4's director of television Kevin Lygo said the decision not to recommission Big Brother was a creative rather than commercial one.
He said it had reached a "natural end".
Mr Lygo explained: "Big Brother is still profitable for Channel 4 despite its reduced popularity and there could have been the option to renew it on more favourable terms.
"That's what a purely commercial broadcaster would have done, but Channel 4 has a public remit to champion new forms of creativity.
"That remit to push the boundaries has been an essential part of the weird chemistry behind Big Brother's success, but it's now what is telling us that the programme has reached a natural end point on Channel 4 and it's time to move on."
Channel 4 said the move would lead to "the most significant creative transformation" in its history by freeing up 200 hours of peak time on the station and digital channel E4.
It will lead to a complete review of content at the cash-strapped broadcaster which will divert much of the BB costs to new programmes.
Mr Lygo said: "Cancelling Big Brother does not solve Channel 4's funding issues; this year we've nearly £125 million less to spend on programmes than we did a couple of years ago and budgets for next year may have to be reduced further.
"However, assuming advertising revenues stop deteriorating at some point, we should have greater flexibility in how we spend our commissioning budget.
"The significant sums that have been committed to Big Brother in the past should now be available to boost budgets in genres, such as drama, that have had to be cut back sharply during the downturn."
Julian Bellamy, head of Channel 4, said: "Big Brother will leave a huge hole and filling it will involve the most fundamental creative overhaul in our history. We've 18 months to transform the schedule; today's announcement is our biggest-ever creative call-to-arms to producers to come forward with their very best ideas."
Since its launch in 2000, Big Brother has been one of the UK's biggest TV talking points. From the expulsion of "Nasty" Nick Bateman during the first series to the racism and bullying rows which engulfed Celebrity Big Brother in 2007, it has generated countless headlines.
It has also made stars of contestants - most notably the late Jade Goody. Others who have gone on to capitalise on the career boost of BB have been Kate Lawler, who went on to become a TV and radio presenter, and Craig Phillips - the first winner - who became a TV handyman.
But interest in the show has shown a marked decline. From highs of eight million viewers at the height of its popularity, it has limped along with roughly two million for this series.
Channel 4 said today it had already started to allocate an extra £20 million from the money which has been freed up to pump into drama for C4 and E4 from 2011.
Mr Lygo said he wanted more "event" drama such as recent mini-series Red Riding and The Devil's Whore, plus continuing series such as Shameless and Skins.
Heralding this increased emphasis on drama, C4 announced today that it has commissioned a four-part serial from acclaimed director Shane Meadows called We Were Faces.
It will also screen a four-part drama from Peter Kosminsky, called Homeland, as well as an adaptation of William Boyd's best-selling novel Any Human Heart.
Mr Lygo said: "Channel 4 is at its best when it does things that others don't or won't. This is a fresh opportunity to reach out to audiences under-served by drama on the more mainstream channels."
Mr Bellamy praised the impact Big Brother has had on the TV landscape over the past decade.
"Big Brother has been our most influential and popular programme over the last decade. It's been hugely innovative in its own right, has provoked a really astonishing level of public debate and has been an under-appreciated showcase for social diversity and youth culture.
"Its success has also helped support an extraordinary range of creativity across Channel 4. Inevitably, we're both excited and ever-so-slightly terrified by the prospect of getting by without it."
He said the channel was grateful to the loyal viewers who would be "disappointed" by the axing.
"The final series will be an opportunity to give Big Brother an appropriate send-off and celebrate one of the most extraordinary programmes, not just in the history of Channel 4 but of TV in general," Mr Bellamy said.
Mr Lygo rejected the suggestion that the show's decline was prompted by the race row that marred Celebrity Big Brother in 2007.
Ratings for the main show were still among the strongest on the channel, he said, and if it had been a purely commercial decision, he would have sought to negotiate a new contract with Endemol.
He said he thought another channel was likely to pick up the show, and would be pleased to see it continue on air.
Dropping Big Brother will free up more than £50 million in total, Mr Lygo said, some of which will be allocated to E4 to buy in programmes.
Channel 4 will be looking for more quirky series in the Shameless and Skins mould to win younger audiences.
Mr Lygo said he wanted something that would suit a long run of 20 or more episodes and "would not look out of place" on US cable channel HBO, which has a history of showing high-quality series including Sex And The City and The Wire.
The current series of Big Brother winds up on September 5.