The Picnic proposition will also allow Sky to sell its broadband offering as a standalone option, with customers able to choose one, two or all three of the services.
Sky is currently able to serve 70% of UK households with its unbundled network, which it began building with the £211m acquisition of Easynet in 2005.
It said the decision to launch depends on the outcome of Ofcom's review into its plans to pull its TV channels off Freeview and make them subscription-based.
Ofcom has said it plans to open a consultation in the autumn to inform the review. It is believed the earliest Sky could launch the service if Ofcom approves its plans is in early 2008.
Sky said the service will require a new generation of DTT boxes, which it will not subsidise. According to Sky, manufacturers will be free to set their own specifications, such as an additional PVR, and retailers will decide prices.
The first manufacturer to offer a Picnic-compatible box will be Sagem and Sky expects other manufacturers to follow suit after launch.
Sky wants the boxes to use not only the existing Mpeg2 compression standard employed by Freeview, but also the newer Mpeg4 standard which would allow it to carry four channels instead of three. It will require additional approval from Ofcom to launch in Mpeg4.
James Murdoch, chief executive of Sky, said: "The launch of Picnic will be a big step forward for customers who are hungry for value and simplicity. We are looking forward to the conclusion of the regulatory approval process so we can get going delivering a great service and real savings to customers."
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