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The party has said it was ruling out nothing in a wide-ranging review of its policy towards the BBC, although the shadow secretary for culture John Whittingdale told the BBC that the licence fee was difficult to justify in the face of what he said was growing public opposition.

Although no firm policy has been laid out, the party is considering the introduction of advertising as one idea.

"I would expect that we would come forward with proposals that certainly could include the idea of commercials or even a direct Treasury grant. We are ruling nothing in and nothing out," Whittingdale said.

It is unclear whether the Tories will suggest advertising on the whole BBC service or just on its new digital channels.

The idea of introducing ads on the BBC has been discussed many times in the past, but it is far from straightforward. It would immediately deny the cash-strapped commercial sector much-needed revenue.

There are other suggestions on the table. Last month, Channel 4 director of television Tim Gardam called for the government to consider opening up the licence fee to other broadcasters.

The Tory review comes as relations between the BBC and the official opposition hit a low, following Tory leader Ian Duncan Smith complaining that news coverage of local elections last week downplayed his party's success.

Whittingdale said that the party was in an "open mind about the best way to finance the BBC". However, he went on to suggest that the Tories do not believe the BBC should be competing so heavily with the commercial sector.

"I see the BBC's raison d'etre as a public service broadcaster -- it should not be replicating a large amount of the output seen on other channels."

The party made clear its objections to the compulsory nature of the licence fee, which gives the BBC £2.5bn in revenues in each year. Whittingdale called the fee "an extremely large amount of public money".

Duncan Smith said this morning that he believed the idea of scrapping the £116-a-year licence fee was a vote winner.

The Conservatives have welcomed the government's review of the way the BBC operates, which it announced last year ahead of the BBC charter renewal in 2006.

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