The E-Wired scheme is starting in Shoreditch, an area close to the City of London that is home to many deprived council estates. It covers 20,000 people in the area, connecting them via ultra high-speed broadband.
IBM is backing the deal, which is also being funded by the Office of the Deputy Prime Minister and supported by London mayor Ken Livingstone, with plans to roll it out in other boroughs.
It will give residents of the area access to services including digital television, video on demand, network games, resources to help them find jobs, online CCTV to improve security on the site, and free local telephone calls.
Michael Pyner, chief executive of the Shoreditch New Deal Trust, said: "It shows that IT projects are not just the preserve of a rich elite, they can make a major contribution to traditional working-class communities who would otherwise find the internet revolution passing them by."
The move is part of the government's plan for digital Britain, giving every home access to broadband internet by 2008, and switching off the analogue television signal by 2010.
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