The BBC will remain vulnerable to political pressure despite government plans for the BBC's future, according to a House of Lords select committee.
The BBC's current charter will expire in 2006
The comments were made in a report on its review of the BBC's Royal Charter, published on Tuesday.
"The BBC cannot be truly independent of government if government alone has the power to decide its charter," said committee chairman Lord Fowler.
In a statement, the BBC said it would "examine carefully" the Lords' report.
It said that BBC governors, executives and staff had "co-operated fully with its important contribution to Charter Review".
A spokesman for the Department for Culture, Media and Sport said: "We thank the Lords Select Committee for their contribution.
"We will consider it as we move towards publication of the BBC Charter Review White Paper."
The BBC's current charter, setting out the corporation's role, functions and structure, is due to expire at the end of 2006.
The main findings of the committee's report centred around the governance and regulation of the BBC, the licence fee and the BBC's constitution.
In its recent Green Paper on the future of the BBC, published in March, the government recommended the BBC board of governors be scrapped and replaced by a BBC Trust and an executive board, a stance later accepted by the BBC.
But Lord Fowler said the plans were "ill-conceived".
Culture Secretary Tessa Jowell is responsible for the Green Paper
"The Green Paper - A Strong BBC, Independent of Government - fails to live up to its title," he said.
"Crucial decisions affecting the BBC are taken by the government alone," he added.
"This model fails to separate governance and regulation of the BBC, allowing the corporation to remain judge and jury in its own case. Ofcom should provide independent regulation of the BBC's activities," he said.
The select committee report said the "confusing, misguided and unworkable" proposals highlighted the government's failure to make the BBC truly independent.
It suggested that the BBC should be governed by a unitary board with a majority of non-executives and that the board should sit above a management committee headed by the director general.
The BBC chairman should also be chosen by a truly independent panel, it added, while Ofcom should have the same regulatory responsibilities for BBC content as it has for other broadcasters.
The BBC's recent proposal to increase the licence fee with a 2.3% above-inflation rise was also criticised by the select committee.
It said the corporation should not expect automatic licence fee settlements above the rate of inflation, and should only be agreed if there are exceptional reasons to justify them.
Lord Fowler said it was "difficult" to see how the proposed increase could be justified, adding that lower-income households would be hardest hit.
"There is no reason why the licence fee payer should bear the cost of digital switchover given that the government will make a substantial amount of money from the sale of the analogue spectrum," he said.