The increase, which is 1.5% above the rate of inflation, would bring the cost of the annual fee to £116, providing the BBC with about £100m in extra revenue.

It is in line with a formula set out in 2000, following a review of the future funding of the BBC by an independent review panel.

Ms Jowell has announced a compulsory review of the fee

Ms Jowell said: "This formula will enable the BBC to provide a strong and distinctive schedule of high-quality programmes and remain at the forefront of broadcasting technology."

Last month she announced there would be a review of the compulsory licence fee beyond 2006.

Critics want it to be abolished, claiming it is poor value for money and gives the corporation an unfair advantage over its commercial competitors.

Last month Barry Cox, the deputy chairman of Channel 4, said it should be abolished and part-funded by a subscription instead.

In making the criticism, Mr Cox described the BBC as a "cultural tyranny".

And in a newspaper survey in October, more than half of people questioned said it should be scrapped.

The BBC is mostly funded by £2.3bn it receives annually from TV households paying the licence fee.

Our aim is to ensure as much money as possible is invested in programmes BBC spokesman

Ms Jowell has said the BBC must "justify" its fee.

The BBC said the previous licence fee settlement under former Culture Secretary Chris Smith in 2000 had required the corporation to match increases with "very tough" self-help targets.

"Since the settlement we have cut overheads from 24% to 15%, ahead of target," said a spokesman.

"Our aim is to ensure as much money as possible is invested in programmes."

The BBC is investing our licence money into more and more digital television channels Peter Rafferty, UK

I am not opposed to paying for a licence fee so long as I see a return on such an investment. However, it seems to me that the BBC is investing our licence money into more and more digital television channels, which only those who subscribe to cable or Sky Digital can receive.
Peter Rafferty, UK

Paying the TV licence is worth it just for Eastenders!!! Let alone the news and everything else!
Rich H, UK

I am angry that I will be forced to pay more for a service which I cannot fully use. BBC 3 is not available to everyone and yet the BBC has the audacity to charge everyone more to fund these extra services.
John Marsden, England

You get good value for money! Christine Guest, Canada

All the time I lived in England I always complained about having to pay for a TV licence. Now I live in Canada and have to watch American TV I'd be more than happy to pay the licence fee and watch good British TV programmes! It's not until you miss it that you realise what good TV you get in Britain! It may be hard to hear it said but you get good value for money!
Christine Guest, Canada

Prior to moving aboard from England I thought that the licence fee was a total waste. Now, after witnessing what other countries have I have totally reversed my opinion. The BBC sets a standard, a standard that would be eroded if left solely to the commercial channels.
Kevin , USA

Considering it only costs the price of a few DVDs, the licence is great value for an entire year of TV and radio entertainment. The alternative is to start down the slippery slope to the US payment model, which while being 'free', shoves commercials and sponsorship continuously down your throat.
Malc Kelley, UK

The public transport system should give enough clues as to what happens when profit is the only motive James Styles, England

Thank the licence fee for keeping BBC standards above the rubbish that is shown on the commercial channels(Channel 4 excepted). When something is apparently free, the law of the lowest common taste sets in as advertisers know. The public transport system should give enough clues as to what happens when profit is the only motive.
James Styles, England

The TV Licence fee should be scrapped. We must be the laughing stock of the modern world and should have a democratic right to our say in this extra tax!
Dave Rooney, Scotland

Broadcasting, be it television or radio, is hugely important. It effects everybody's lives in every way and for many is one of the main sources of information, education and entertainment. Do we really want to live in a society where radio and television is only run by people whose prime concern is making profit for shareholders?
James Pittman, England