Last year £3.4bn in licence fee money was collected
A backbench Tory MP has dropped his attempt to scrap the TV licence as it had little chance of becoming law.
Christopher Chope told MPs there was "increasing hostility" to the "despised" annual charge and the BBC should be funded by other means.
But his private member's bill was attacked by MPs on all sides, including Tory arts spokesman Ed Vaizey who said the party supported the licence fee.
Barbara Follett, for the government, said it was the "least worst" option.
Opening a second reading debate on his Broadcasting (Television Licence Fee Abolition) Bill in the Commons, Mr Chope said: "This is about abolishing the television licence fee, more accurately described as the television tax.
"It is not about abolishing the BBC. Indeed one can be a friend of the BBC, as I am, without being a supporter of the licence fee."
He said the BBC World Service, which is funded directly from the Foreign Office, was the best output the corporation produced and was a "living demonstration" that the BBC's ability to produce impartial, informative and entertaining programmes did not depend on the licence fee.
But Labour MP Andrew Dismore criticised Mr Chope for failing to present alternative methods of funding and accused him of jeopardising the BBC's worldwide reputation "with a back of the fag packet bill".
"He should have known better than to put before the House such a badly-drafted and half-baked piece of legislation," he added.
Mr Chope said it was not for him to propose alternative funding methods as the government already had "alternative ways" to pay for the BBC - he wanted the Bill to spark a "big debate" about funding.
And he hit back at Mr Dismore's claim that his proposals would lead to the closure of the BBC.
"It wouldn't shut down, all it would be doing is ensuring that the despised compulsory impost of the BBC licence fee is removed from the statute book."
Mr Chope also attacked alleged waste at the BBC, saying it had 744 senior managers, with 672 of them earning more than £70,000 a year and 13 earning more than £250,000 a year.
He added: "The present situation is unsustainable. Public service broadcasting by ITV is in grave jeopardy and BBC licence fee payers are in revolt."
Shadow arts minister Ed Vaizey said the Conservative Party was a "firm supporter" of the licence fee but said people should not be put off from discussing whether it should be scrapped.
Richard Younger-Ross, for the Lib Dems, also backed the licence fee, telling MPs: "The role of the BBC is crucial, we cherish the BBC for its diversity, its educational programmes, its high-quality drama and comedy, its children's shows, all free from adverts."
Junior culture, media and sport minister Barbara Follett said the 2006 charter review found that, compared to the alternatives, the licence fee was the best funding method for the foreseeable future.
"In other words, it was the least worst option," she said. The BBC would continue to be funded by the licence fee for the duration of the charter until the end of 2016, she told MPs.
"We have looked at the funding of the BBC from every which way possible, and we have concluded that the current way is the best," added Ms Follett.