The government has no plans to subsidise broadband services to ensure they are available in remote areas of the UK, E-commerce Minister Stephen Timms has insisted.
60% of houses have internet connections
Encouraging competition between service providers was a better way than providing hand-outs for getting rural communities online.
Mr Timms admitted that more than a quarter of households across the UK were not within reach of an affordable broadband service, with rural areas being the worst off.
Mr Timms and Rural Affairs Minister Alun Michael were defending the government's position during questioning by the House of Commons environment select committee.
The whole problem with the government's approach is that it has been essential for it to be demand led when infact nearly all these technologies rely on being supply driven
Members were concerned why broadband was taking so long to reach remote areas of the UK, despite the government's target of having "the most competitive and extensive broadband network in the world".
Tory MP Bill Wiggin said while the ministers were "celebrating two million users connected to broadband", they were "really missing the point" that there was a "fundamental problem" with the take up of broadband.
"Something like 60% of houses in the UK already use the internet," he said.
"We are not talking about technology people don't understand and it's quite important not to mislead the public.
"The whole problem with the government's approach is that it has been essential for it to be demand led when infact nearly all these technologies rely on being supply driven and that is why there is a fundamental problem with take up of broadband."
Mr Timms acknowledged that "over a quarter of households in the country are not within reach of an affordable broadband service today".
But he stressed: "That is about the same proportion as in the US. We need to recognise that this is not by any means a UK issue. It's an issue that is being faced particularly in rural areas right around the country.
"I think if you look at the history of the development of telecommunications, what you find is that the best approach is a market led approach and that where you have had attempts made to provide large government subsidies to encourage the roll-out of new technologies, that by and large has not been very successful.
"There is a short term gain, but you end up with technology that actually people don't want and, as the technology moves on... there is a market distortion introduced by large amounts of public subsidy proves to be a disadvantage in the long term."
Mr Timms said competition had been seen as a more effective tool in extending the use of mobile phone services to rural communities than any intervention by the state.
But Labour's David Borrow said the committee's impression was that the expansion of broadband was "largely market led" and this was not going to deliver access to it quickly.
Tory member David Curry also urged the ministers to state whether it was "the government's aim that every community in the UK irrespective of location should be able to access broadband at affordable rates within a reasonable time".
Mr Michael admitted that there were clearly places where connection by cable or through an exchange was "not possible" but where other technologies could be the answer.
In November, the prime minister announced government spending of £1bn on broadband to improve public services, with a broadband connection in every school by 2006.
Meanwhile, BT is speeding up plans for thousands more places around the UK where you can go online via a wireless broadband connection.
To further that aim, the telecoms giant is offering wireless starter kits, dubbed hotspots in a box, which will allow companies to set up their own wi-fi networks.