The last programme will air on July 30, completing a 42-year run, with the corporation keen to stress that the decision had not been taken lightly and that "every effort" had been made to maintain the programme's relevance over the last few years.
However, the BBC's Creative Future Music Strategy decided that 'Top of the Pops' no longer occupied the iconic position within music programming it once did, and in the face of increasing competition from internet downloads, niche music marketing and 24-hour music channels, its demise was inevitable.
'Top of the Pops' has experienced an alarming decline in audience figures in recent years, and the BBC has said it will now be renewing its commitment to its other musical programmes, which include live music on BBC Two's 'Later... with Jools Holland', and BBC Four's 'Sessions'.
Jana Bennett, the BBC's director of television, said: "We're very proud of a show that has survived 42 years in the UK and gone on to become a worldwide brand, but the time has come to bring the show to its natural conclusion.
"Although we bid a fond farewell to 'Top of the Pops', we remain as passionate as ever about reflecting the vitality of contemporary music across all our channels."
Mark Cooper, BBC head of entertainment group, said that the 'Top of the Pops' brand "would not disappear entirely from British TV screens" because the corporation still plans to screen its archive footage programme 'TOTP2' on BBC Two, and run one-off specials occasionally.
'Top of The Pops' first aired on New Year's Day 1964 from a studio in Manchester, where it was presented by Jimmy Savile. The Rolling Stones are credited as the first act to appear on the programme, performing 'I Wanna Be Your Man.' The line-up also featured Dusty Springfield, The Hollies and Cliff Richard & The Shadows.
The programme has since been broadcast in more than 120 countries worldwide, and has had over 150 presenters, including Robbie Williams, Noel Edmonds and Ant and Dec. Cliff Richard is the artist to have appeared most on the show, with a record 160 times.
In August last year, the programme shed nearly half of its audience following a disastrous move to a Sunday night BBC Two slot, which saw its audience drop to an all-time low of 1.1m from 2.4m.
Since the advent of MTV, younger viewers may remember The Stone Roses and Happy Mondays appearing on the same episode at the height of Madchester in 1989, Kurt Cobain breaking the programme's mime policy with a bizarre rendition of hit 'Smells Like Teen Spirit' in 1990, and the show staging the 1995 "battle of the bands" face-off between Blur and Oasis.
The end of the show could also signal the demise of the Top of the Pops magazine. The BBC could not be reached for comment on the future of the title, which has been similarly troubled by the disappearance of its audience.
Its circulation has halved within the space of a year, dropping 51.9% from 200,907 in the second half of 2004 to 96,576 in the second half of 2005.
The situation in the teenage pop magazine market has been dire, forcing Emap to close Smash Hits! in February. Its final ABC circulation figure was 92,398, down 26.7% from a year earlier.
The BBC announced yesterday that its celebrity sports quiz programme 'They Think It's All Over...' would also be finishing after 11 years.
In April, the corporation said it was to phase out 'Grandstand' by 2009 after a run of 48 years. The decision was made following an internal review of the BBC's sports output, to ensure it was meeting the needs of digital and on-demand programming.
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