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Grade will take up one of the most prominent roles in British broadcasting on May 17.

Speaking about his appointment Grade said: "This is quite a day for me. Apart from my obvious pride and delight, I also feel my experience has prepared me to step into the role at a difficult moment in the corporation's history. I would like to thank those who appointed me for having the courage to break the mould."

Grade also paid tribute to his predecessor Gavyn Davies and claimed that the editorial independence of the BBC is paramount in maintaining the support of the viewers and listeners. "Without it there is no point to the BBC," he said.

BBC media correspondent Torin Douglas has been quoted as saying that Grade's appointment would not be seen as that of a "safe pair of hands."

The IPA, which represents British advertisers, said it cautiously welcomed the appointment, but voiced concern that the historical, "populist" approach taken by former director-general Greg Dyke -- and approved by Grade's predecessor -- should not re-emerge to dominate the BBC's output.

Rival broadcasters such as ITV and Five are likely to seek reassurance that Grade's business background will not hinder the BBC's public service remit and increase the BBC's commercial operations. There are fears that there may be a commercial shift at the world's largest public service broadcaster.

Grade's first task as BBC chairman will be to lead the search for a new director-general to replace Greg Dyke, who resigned from the post following the Hutton Report and the resignation of chairman Gavyn Davies.

The new chairman will also have to submit a report to the government on the future of the BBC, which will determine whether its Royal Charter is renewed in 2006 for another 10 years under its current funding formula and public service remit.

Grade, 61, has a strong media heritage having been chief executive at Channel 4. He comes from a showbusiness background -- his uncle Lord Lew Grade was one of the pioneers of ITV. He has also held the posts of director of programmes at London Weekend Television and BBC Television, as well as heading the merged Pinewood and Shepperton studios. Grade applied for the role in 2001 but the then vice-chairman Davies was selected.

Others that were on the shortlist for the chairman's job included veteran broadcaster David Dimbleby and Baroness Young of Old Scone.

Grade will be resigning from the boards of Camelot, SMG and the Television Corporation before May 17, as well as from a number of other commercial and pro bono appointments. He will retain his non-executive chairmanship of Pinewood Shepperton and the chairmanship of business information group Hemscott.

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