Trials of the service are scheduled for next spring, and negotiations between BT and content providers such as the BBC are ongoing.
BT would provide the service through a set-top box capable of receiving Freeview channels. It will deliver video-on-demand and exploit the interactive capability of broadband.
Gavin Patterson, the group managing director of BT Retail, said the service would complement free and paid-for broadcast TV.
"There is an opportunity to complement broadcast TV with on-demand content, catch-up TV and some of the interactive experiences you get through broadband," he said.
However, NTL and Telewest will not welcome the competition to their "triple-play" TV, phone and broadband-over-cable services.
BT is to use Microsoft's IPTV Edition technology, which the software company said allows the integration of TV services with PCs, phones and games consoles.
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