The airline - a subsidiary of British Airways - was launched with great fanfare last month offering an unrestricted £100 return fare to Rome, Milan, and Copenhagen, flying from London's Stansted airport.

But under the new fare structure, only a few seats will be available for that price - and none at all to Rome, where the standard return becomes £120.

Most seats will be offered on a flexible fare basis for £150 (£180 for Rome), while as seats become scarce on particular flights the prices could rise to as much as £290 - not much below the cost by scheduled or charter airlines.

The airline says it still represents good value for money and represents better value than traditional airlines.

"Every flight will have more seats at the lower price than any of our competitors" said David Magliano, Sales and Marketing Director.

EasyJet has protested over its new Stansted rival

But rival airline EasyJet, which is based at Luton, accused Go of unfair competition.

Spokesman James Rothnie told the BBC that the airline was still trying to drive other discount airlines out of business.

EasyJet has taken British Airways to court for uncompetitive practices.

It claims that Go can lease its Boeing 737s for lower rates because BA is underwriting the leases.

Analysts believe that a discount price war could be ruinous for an industry operating on very slim profit margins.

As well as EasyJet, Debonair and Virgin Express have moved into the discount airline business as European deregulation has gathered pace.