Many phone customers are unaware of the savings they could make simply by switching supplier, according to the public spending watchdog.
BT continues to dominate the UK market
The £7bn market for residential fixed phone lines is still dominated by British Telecom (BT).
But research by the National Audit Office (NAO) suggests people could save up to two thirds of the cost of national peak time calls by using a different supplier.
It is urging telecoms regulator Oftel to raise consumer awareness.
BT, which made pre-tax profits of £1.8bn last year, says it competes vigorously but fairly.
The company is cheaper for off-peak national calls and phoning a mobile telephone at off-peak times during the weekend.
But competitors charge less than a quarter of its tariff for international calls
In a report published on Friday, the NAO says 70% of customers remain loyal to BT despite competition from two cable companies and more than 200 "indirect access operators" that negotiate access to BT's network.
Three million people rent their phones from BT at a cost of £17.88 a year, the report adds.
But a basic handset bought from the High Street costs just £6.99.
Nevertheless, an Oftel survey found 96% of phone
customers were satisfied with their fixed line service.
Most are simply "not prepared to
switch to an unknown supplier with an unfamiliar brand," the NAO says.
Its report adds: "Suppliers offer a wide range of tariffs and discount schemes and we found it
difficult for consumers to calculate which tariff, from which supplier, would
amount to the best deal."
Oftel has already begun to sharpen up its approach to educating consumers about the choices they have.
The regulator said it had "taken on board " the NAO's criticism.
Edward Leigh MP, chairman of the public accounts committee, said: "Too many consumers still do not realise that there are savings that can
be made by switching suppliers."
BT issued a statement saying it "competes vigorously but fairly and within a regulatory environment that
is entirely transparent".