But the company's financial results were hit by the promotion that drove demand.

In the three months to 30 September, BSkyB reported losses of £13.6m, against a profit of £52m in the previous period.

The driver of demand for BSkyB's 140-channel service has been the offer of free equipment and a special rate of installation for subscribers taking the package for a year.

This deal, which was announced in early May, triggered similar schemes from rivals ONdigital, owned by Granada group and Carlton Communications.

Earlier this month, Sky Digital's rival ONdigital said it had signed up 411,000 subscribers up to end September. It also announced a new pre-paid digital service to entice subscriptions in the run-up to Christmas.

BSkyB added that 52% of its digital sales were to new subscribers and its total customer numbers were 7.86m in the year to the end of September.

No to French link-up

The results coincided with the the company's annual general meeting, which was chaired by Rupert Murdoch.

Mr Murdoch dismissed reports that BSkyB was set to merge with French broadcaster Canal plus.

French conglomerate Vivendi, owns 24.5% of BSkyB and 49% of Canal Plus, prompting reports that a merger was likely.