Torin Douglas on BBC Radio 4's Today programme explores the future of digital radio

It has unveiled the first models, which will cost between £500 and £1,000.

But the BBC says prices will begin to drop within six months as more sets become available.

The move to digital will bring much improved sound quality and new features such as automatic tuning.

Eventually, listeners will be able to download text news updates using the built-in screens and hear "instant replays" during sports matches.

The Director of BBC Radio, Matthew Bannister, said the BBC will introduce digital radio to 60% of the UK population following three years of testing.

Digital radio is 'stunning'

Matthew Bannister, Director of BBC Radio, explains some of the benefits of digital radio

Mr Bannister said: "The BBC has pioneered digital radio in the UK.

"Our engineers have worked in partnership with others to develop the technology and we have invested in a chain of transmitters which today can reach 60% of the UK population, including coverage of all major motorways.

"I'm one of the relatively few people who already know what it is like to drive round listening to digital radio. It's stunning.

It could be three years before portable versions are on sale

"At the BBC we have invested £6.7m of broadcasting money into digital, which is not a great deal.

"We do not wish to waste licence payers' money on a service that is not available to everyone, so we will monitor how this initial launch is dependent upon set availability and prices.

"But the technology to do this is here now."

Five audio manufacturers, Kenwood, Bosch, Clarion, Pioneer and Grundig, will release products capable of carrying the system.

Most of the sets will be "behind the dash" decoders that can be attached to listeners' existing car radios.

The BBC's digital services will come under competition in 1999 from a group of commercial broadcasters, led by radio company GWR Group which plans to invest £10m to launch new channels.