The Government this week rejected funding the BBC through advertising, saying it would result in "dumbing down", but opened the door for subscription to eventually replace the licence fee.
In a Green Paper published on Wednesday, the culture secretary, Tessa Jowell, safeguarded the licence fee for at least another ten years to give the BBC "stability and security". She said alternative funding methods, subscription in particular, would be considered after 2016. At that point, ministers would also consider hiving off part of the licence fee to other public service broadcasters.
Jowell announced that the BBC governors, who have overseen the BBC since its foundation more than 80 years ago, will be replaced by a BBC Trust.
The Trust will have responsibility for the licence fee and ensuring the corporation fulfils its public service obligations and also for a formally constituted executive board to deliver services under a framework set by the Trust.
Mark Thompson, the BBC's director-general, is expected to chair the executive board. He said: "The BBC faces exciting and daunting new challenges over the next decade."
The document said: "The BBC would certainly attract advertisers if it were allowed to, particularly to its mainstream services. However, modelling of the ad market suggests such a move would push down prices."
The Green Paper warned that advertising would create "conflicting incentives" for the BBC, with its "public purposes" weighed against the need to generate revenue.
There were "fewer concerns" about sponsored programmes but this would not deliver enough income.
Jowell believed the public would be willing to subscribe to BBC services but said this would undermine the principle of free universal access and have "significant practical problems" - for example, on radio.
- Comment, page 40.