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BBC chairman Michael Grade said the corporation was opposed to the Green Paper's recommendation of top-slicing the licence fee to share with rival broadcasters.

He said it would pose a threat to the political independence of the BBC and weaken its ability to invest in public service content.

"It would pose a threat to the political independence of the BBC, handing a punitive fiscal sword of Damocles to any unscrupulous government that wanted to bring the BBC to heel.

"The licence fee is central to the whole idea of the BBC as we know it. We feel strongly that the fundamental strengths of the licence fee system will remain valid -- if not even more valid -- in the fully digital world to come," Grade said.

The BBC accepted its governance should change to the Trust model to remain independent, which will involve the abolition of the board of governors after 77 years and replacing it with trustees.

Grade said trustees should be chosen for skills and expertise rather than representing special interest groups.

In this way he said that the Trust would be accountable to licence fee payers, responsible for the fee, and ensure the BBC fulfills its public service obligations.

Tessa Jowell, the secretary of state for culture, media and sport, has guaranteed the licence fee until the end of 2016, but wants to start discussing alternative means of funding several years before.

Talk of advertising and subscriptions services or even a partial sell-off have been floated.

The BBC said today any debate should be put off until the analogue switch off -- currently scheduled for 2012 -- when the UK will be fully digital.

BBC director-general Mark Thompson said the digital media age would be well-suited to licence fee funding.

"There is no reason to believe that the digital revolution will prevent fiscal or technical obstacles to the idea of the British public deciding pooling investment to guarantee universal access to great content. If the need remains, the means will be found," he said.

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