The BBC must be more ambitious and innovative in its programming, audiences have told the corporation.
More money has been spent on dramas such as Robin Hood
Viewers and listeners are saying "loud and clear that they want fresh and new ideas", according to the new BBC Trust.
The trust revealed details of its audience research as the broadcaster's annual report was published.
Spending on TV drama will go up by more than 16% this year, it was revealed, while a boost in income has led to a surplus of £60m in the BBC's finances.
This is the first annual report since the trust was set up to oversee the corporation's activities and act as the licence fee payers' voice.
In the most comprehensive survey ever undertaken by the corporation, the trust asked 4,500 people how well they thought the BBC was performing in key areas.
BBC Trust chairman Sir Michael Lyons said: "The core message from our report is that the area where there is a significant and noteworthy gap between public value and their perceived performance is under the heading of innovation.
"People want to be constantly challenged by new and exciting programmes but this an area where there's a gap in perceived performance."
Bigger funds were ploughed into programmes in the financial year of 2006/7, according to the BBC's annual report.
More than £3bn was spent on BBC services, up 5% from the previous year, with more money going into original drama and entertainment, especially on BBC One, managers said.
In drama, money was focused on Saturday evening shows such as Robin Hood and Doctor Who, and midweek pre-watershed series like Waterloo Road.
"Our audience research indicates that BBC One is seen as the best channel for drama, and that they want more high quality original drama on the channel," the report said.
But with ratings to BBC One and BBC Two continuing to decline, the trust warned that the corporation could not afford to "stand still".
They noted that the audience for soaps such as EastEnders had fallen 10% in the past three years.
BBC director general Mark Thompson said that while all soaps had high and low periods "you can see real creative strength coming back to EastEnders".
He added that while no commitment had been made to increasing the number of weekly EastEnders episodes to five it had not been ruled out.
The number of repeats fell slightly in peak time but increased during other hours. The trust has asked executives to "retain the commitment to decrease repeats in peak time".
Mr Thompson said the BBC had enjoyed an outstanding year but conceded "there were bumps along the way". Problems with phone-ins on Saturday Kitchen and Blue Peter were "editorial lapses" and broke the trust of the audience.
Also on Tuesday, former BBC chairman Michael Grade separately called for a "zero tolerance" approach to misleading viewers over premium line phone-ins.
HOW LICENCE FEE OF £10.96 A MONTH IS SPENT
£7.54 - Eight national TV channels
£1.17 - Ten national radio stations
£1.01 - Transmitters and licence fee collection
75p - Forty local radio stations
49p - More than 240 websites
Source: BBC annual report
The BBC Trust described the problems as "serious breaches in standards" and said it would review that area later this year.
The corporation also fought off criticism of ageism levelled at it following the axing of newsreader Moira Stuart.
"It is simply not the case that we are making age a factor in deciding whether presenters should be in a programme or not," said Mr Thompson
"You cannot ask us endlessly, and rightly, to focus on originality without allowing us to sometimes to say we want to bring in new faces.
"But there is no agenda about trying to shift demographics in this way and frankly it would not work - it would be mad."
BBC One - 78% of population tune in every week
BBC Two - 57%
BBC Three - 14%
BBC Four - 6%
Radio 1 - 21%
Radio 2 - 27%
Radio 3 - 4%
Radio 4 - 19%
Five Live - 12%
Local radio in England - 19%
Source: BBC annual report
The Parliamentary Culture, Media and Sport select committee later questioned Sir Michael and Mr Thompson on the annual report, and asked why the BBC felt the public did not have a right to know the salaries of its highest-paid talent.
It followed the sacking of a temporary member of staff last year for leaking presenters' salaries to the press, including Jonathan Ross, Sir Terry Wogan and Chris Moyles.
Sir Michael said the trust was going to look at what "dangers there might be in disclosure" of such salaries.
"It may be that if we move to a world where all salaries of performers were subject to rules of clear public disclosure, we might find less people willing to work for the BBC."