Part of the TV licence fee could be ring-fenced to pay for public service programmes on non-BBC channels, the Government announced today.
This could amount to £130 million a year from 2013 for ITV local news, shows for children and other important but less profitable programming.
The proposal formed part of the Government's wide-ranging Digital Britain report, which made recommendations on everything from bringing broadband to rural areas to supporting the UK's computer games industry.
Culture Secretary Ben Bradshaw also said the Government intended to upgrade all national radio stations from analogue to digital by 2015.
Mr Bradshaw said a "strong, confident and independent" BBC was "more important than ever".
But former BBC employee Mr Bradshaw said it was in the corporation's interest to evolve into a "public service partner" with other media outlets.
He said the Government had been encouraging talks between BBC Worldwide and Channel 4 and "we are ready to help in any way we can".
Mr Bradshaw said he agreed with concerns raised by MPs about the need for a "plurality of provision" of local and regional news and welcomed the BBC's response supporting partnerships - but said that alone would not be enough.
Turning to the licence fee, he said there was "nothing in either the BBC Charter, or legislation, to say that the BBC must have exclusive rights to it".
So, he told MPs: "Independent of the level at which the licence fee is set after 2014, we will consult on the option of sharing a small element of it post-2013 to help ensure high quality, plural provision, particularly in the regions and nations."
Pilot projects will be set up in Scotland, Wales and one English region before 2013, he said.
The Communications Minister Lord Carter, who compiled the The Digital Britain report, explained why the Government was going to consultation over the idea of ring-fencing part of the licence fee, primarily for funding news.
He said: "This is a significant decision to change the way in which the licence fee would be spent. We are not running a referendum on it. We will take the licence feepayers' view."
He said the Government would "absolutely" take opinions from the BBC Trust and Ofcom into account.
He continued: "But ultimately, it's also right for the Government to decide what it's going to do. If people come to us with another idea, great, then let's look at that idea. But having looked at it, our starter for £130 million is contained contestability."
Lord Carter said the Government was willing to help facilitate potential partnerships between BBC Worldwide, the BBC's commercial arm, and Channel 4.
But he added that it would not be a "forced marriage".
He said: "If in commercial terms BBC Worldwide and Channel 4 wished to come together in a joint venture and if it required some debt financing the Government stands ready to facilitate it."
A major section of the 238-page report concentrated on how best to ensure strong competition to the BBC in public service broadcasting.
It noted that the old model of commercial broadcasters - where lucrative advertising paid for worthy programmes like high-end drama, documentaries and investigative journalism - was proving unsustainable.
The BBC has made "welcome" offers to work in partnership with its rivals in some areas such as local news, the report said.
But it went on: "On their own they may well be insufficient to meet the scale of the challenge facing public service provision, particularly in nations, regional and local news, where rival news agendas and journalistic inquiry are central to pluralism."
The report announced the launch of three pilot schemes next year - one in Scotland, one in Wales and one in an English region - where consortia of media organisations would produce local news for ITV.
It noted: "Consortia are likely to be able to produce news more cost-effectively than existing Channel 3 (ITV) licensees using assets designed for a different era.
"The result could be a greater investment in journalism, news-gathering and multi-media distribution and syndication than today, enhancing the quality of news in the nations, regionally and locally."Reuse content