The service, which aims to reach out to new Internet users, is part of BBC Worldwide, the commercial arm of the corporation which already runs beeb.com.

Like other free ISPs, it will be financed by a combination of advertising and a share of telephone revenues.

No public funds will be used, but any profits generated by the site will be channelled back into the BBC. There will be no site-specific content, other than links to beeb.com and the publicly-funded BBC Online.

Subscribers will get a POP3 e-mail account, rather than a Web-based mail service, and 20 Mb of free site space for their own site.

CD-Roms will be available from High Street stores and post offices

However, with more than 250 free ISPs available, headed by Dixon's Freeserve, competition to sign up new users is already intense.

Rupert Gavin, chief executive of BBC Worldwide, promised revolutionary ideas that would set freebeeb apart from its competitors.

They include distribution of the software through post offices, and a "no frills" home page without advertising. The advertising revenues used to fund freebeeb, will be drawn from beeb.com sites.

Such measures are designed to attract new Internet users, rather than poach existing users from other ISPs. Calls to the helpline will be charged at 60p per minute.

Speaking at the launch party, Mr Gavin said the Internet was still a relatively untouched market in the UK.

"We are expecting a further 10 million users to be coming online over the next eight years. This is an expanding market."

He stressed the BBC's popularity among the public and its growth on the Web - it is currently Europe's most popular content-generating site. Setting up a free ISP was an "entirely logical" step.

Rupert Gavin: An "entirely logical" step

Mr Gavin said potential freebeeb users would be drawn in by its pledge to plough profits back into public service broadcasting, rather than into the "wallets of other corporations".

"Our target is to attract in the low hundreds of thousands over the next three years," he said, adding that freebeeb is expected to break into profit within two years.

But Worldwide's status as a commercial operation within the wider, licence-fee funded BBC, means it is no stranger to controversy.

Mr Gavin has consistently denied reports that Worldwide is planning to float beeb.com on the stock market. Freebeeb.net was not an attempt to sweeten up potential private investors, he said.

The technology for freebeeb and on-going technical support will be in the hands of ScottishTelecom, a part of the Scottish Power utilities group.

Freebeeb is among more than 250 free ISPs

Last year, Scottish Telecom brought one of Britain's leading Internet providers, Demon, for £66m.

Rupert Miles, director of beeb.com, said software for freebeeb would be available through a range of outlets. CD-Roms could be ordered free over a telephone hotline, or picked up on the High Street at 1,200 local shops such as Dillons, One Stop, Paper Chain and Supercigs.

A deal has also been struck to distribute the disks through 1,500 main post offices during October.

Magazine boost

The software will also be promoted through Worldwide's range of magazines, starting with Radio Times.

From October, the software will also be available for download from the freebeeb.net home page, which can be accessed by all Internet users.

It is not the first time the BBC has launched an ISP. In the early 1990s it was one of the first to launch an ISP with the BBC Networking Club.

It shut down the service, claiming it had established the importance of an ISP and pledging to pass the baton to private industry.

Top Gear presenters Quentin Willson and Vicki Butler-Henderson added a touch of celebrity glamour to the launch.

Consumer tool

Mr Willson stressed the importance of the Internet in helping individual car buyers get a good deal.

"Forty per cent of all consumers in the US use the Net before buying a new car. It helps them get a better deal."

Freebeeb's role in opening the Net up to new users would be important to strengthening the hand of the consumer, he said.

Criticisms

But freebeeb ran into criticism from some quarters. Internet industry news Website The Register reported that several major British Internet publishers thought it would lead to "unacceptable distortions in the private sector".