The long-awaited paper, which sets out the future of the BBC, was entitled "A strong BBC, independent of the government".
In the paper, media secretary Tessa Jowell said the corporation was "as much a part of British life as the NHS" and should remain independent.
It was expected that the corporation would secure its 10-year licence fee, but the abolition of the board of governors after 77 years, although outlined in the Building Public Value manifesto, came as more of a surprise.
The governors are to be replaced by the new BBC Trust, which will be accountable to the licence fee payers and will be responsible for the licence fee and ensuring the BBC fulfills its public service obligations.
The announcement of the trust was welcomed by BBC chairman Michael Grade.
"For the first time in the BBC's history, there is now a clear distinction and appropriate separation between governance and management," he said.
BBC director-general Mark Thompson added: "There are challenges ahead, but also opportunities, including the chance to bring an even wider range of skills and experience to bear on the running of the BBC through the presence of non-executives on the new executive board."
The green paper was due to be published last week, but was delayed after a clash between former BBC director-general Lord John Birt and Jowell.
Lord Birt's "top-slicing" proposal of giving a certain amount of the BBC's funding to other commercial broadcasters was not favoured by Jowell because she believed it would undermine public support and its independence.
Jowell also had the support of Tony Blair, despite Lord Birt being one of the Prime Minister's key advisers.
The news comes as thousands of BBC staff, backed by their trades unions, have joined a protest over Mark Thompson's proposed job cuts at the BBC, which will see at least 3,000 lose their jobs.
The Conservative Party has hit out at the government's green paper, saying the reforms do not go far enough.
John Whittingdale, shadow secretary of state for culture, media and sport, said: "The changes outlined are largely cosmetic. The government has taken the right approach in every area but has failed to go far enough... essentially allowing the BBC to continue for another 10 years with business as usual."
Whittingdale also believes that the charter should be looked at again in five years as opposed to 10 saying "the need for change should be addressed now".
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