The roll-out of fibre-optic broadband in the UK is to be funded by the TV licence fee after the chancellor confirmed that the government would scrap a controversial telephone tax.

Labour had proposed paying for broadband expansion into rural areas with a 50p monthly tax on landlines.

"The previous government's landline duty is an archaic way of achieving this, hitting 30 million households who happen to have a fixed telephone line," George Osborne said.

"I am happy to be able to abolish this new duty before it is even introduced."

Instead, Mr Osborne plans to use cash left over from the digital TV switchover, which has cost less than expected.

He also called for private firms to continue financing the broadband roll-out in the UK.

The announcement comes after culture secretary Jeremy Hunt said that he would scrap the previous government's plans for Independently Funded News Consortia and use the money to fund broadband expansion.

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