BBC News' Denise Mahoney reports

The service provides unlimited Internet access with no registration or subscription fees or hourly online charges.

Dixons' move into the Internet market comes as other traditional Internet Service Providers (ISPs) face competition from every direction.

More than 230 ISPs are fighting for a share of a market currently worth just £100m.

Customers using the service, known as Freeserve, will only have to pay the normal charge for a local rate telephone call to get online.

Users can sign up by getting a free CD-Rom from any branch of Dixons, Currys, PC World or The Link.

The service also has e-mail, Lycos and Scoot search facilities and news from the Press Association.

Support charges

However, there is a sting in the tail for users, who will have to pay premium rate charges for online support. Calls to Dixons' support line - staffed by several hundred people - will be charged at a pound a minute.

Freeserve's general manager Mark Danby told BBC News Online he expected most calls to the hotline to last an average of three to five minutes, so each call should not cost more than around £5.

But other Internet providers say that calls usually last around 10 minutes, meaning customers could find support charges amounting to £10 a time.

Premium rate calls are capped at 20 minutes, so any customers with queries lasting longer than this will be called back by the support team, Mr Danby added.

Competition hots up

CD-Rom available in Dixon shops

In recent months, more and more companies have been moving into the Internet market.

Around 1.16 million are online in Britain, accounting for just 5% of the population.

The Nationwide Building Society is offering Internet access, the Tesco supermarket chain has launched a low-cost scheme and even the rock star David Bowie is selling Internet accounts.

In a few weeks British Telecommunications is launching a new drive to build its Internet presence with the launch of the first service to charge surfers on a per minute basis rather than the usual monthly subscription fee.

BT's 'Click' service will not have a subscription fee but will instead charge users an extra penny over standard phone rates for every minute on-line.

The telecoms giant is also promoting fast Net access through a new ISDN service aimed at home users.

There are also several companies offering free Internet access such as Connect Free and X-stream.

Online foothold

Dixons said it had been looking at the Internet market for the past 18 months and had decided many people would be put off using it by access fees.

Chief executive John Clare said: "Freeserve users will not pay a penny for their Internet access other than the call they make.

"It will encourage far more people to try out the Internet and the services available on the World Wide Web.

"For Dixons, Freeserve is a foothold in the online market," he continued.

"By removing the monthly subscription charges we believe that Freeserve will revolutionise the Internet service market and drive up Internet use."

Energis, one of the UK's largest national telecoms companies, and its Planet Online subsidiary, will supply the network and connections for Dixons.