19 October 2010
Last updated at 17:13 ET
The television licence fee, which funds the BBC, is to be frozen for the next six years at �145.50, it has emerged.
The BBC will also take over the cost of the World Service, currently funded by the Foreign Office, as well as the Welsh language TV channel, S4C.
There had been a proposal to make the BBC pay the cost of free TV licences for the over-75s, but it is understood this will now not happen.
A formal announcement will be made on Wednesday during the Spending Review.
The BBC is refusing to comment, but insiders say that this is a significantly better settlement than the proposal to force it to pay the cost of free TV licences.
It will mean a 16% real terms cut in the BBC's funds over the next six years as opposed to a 25% cut over four years if they had been obliged to cover the licence fee costs.
Ministers are expected to present the freeze as "reining in" the corporation's costs, but Gerry Morrissey, general secretary of broadcasting union Bectu, said he was "alarmed ".
"It seems as if the BBC is now doing the government's dirty work. They have thrown in the towel, so they will now have to justify the cuts to staff," he said.
"How can you cut 16% off your costs without affecting jobs or services? Morale at the BBC is already at rock bottom, but now there is little or no confidence in the management."
The BBC has been embroiled in a row with staff and unions over changes to its pensions provision, and last week it announced that the post of deputy director-general was being axed to cut costs.
The BBC Trust earlier warned the government it would fight any move to force the corporation to meet the cost of free television licences for the over-75s.
A trust spokeswoman said it would be "unacceptable" for licence fee payers to foot the bill.
'Cavalier and short-termist'
Last month, Foreign Secretary William Hague told MPs the World Service was of "huge importance" but could not expect to be immune from cost-cutting.
"Can the BBC World Service make itself more efficient and therefore contribute to the spending round? Yes, I think it can and it thinks it can," Mr Hague told the Commons Foreign Affairs Committee.
But shadow foreign secretary Yvette Cooper said she was concerned about the announcement.
"It is alarming that only 24 hours before the spending review, the funding of the World Service has been completely up in the air," she said.
"Although editorially independent, the World Service is a key component of UK diplomacy and does important work promoting British values and open debate across the world.
"Jettisoning it from the Foreign Office at this late stage, without serious consultation or a strategy for its future, is cavalier and short-termist."
The Department for Culture, Media and Sport currently funds S4C to the tune of just under �100m a year.
Along with the channel, the BBC will also take over the cost of BBC Monitoring, which monitors, translates and analyses media coverage from around the world.
