Sir Michael Lyons, Chairman of the BBC Trust, began a fightback against plans to slice off part of the BBC’s £3.6 billion licence fee as hopes grew that the scheme could be overturned with the help of unhappy Labour MPs.

The chairman’s opposition puts the BBC on a collision course with ministers, after the Digital Britain White Paper confirmed proposals to share £130 million a year of licence fee money with ITV’s otherwise loss-making regional news services.

Sir Michael said that the BBC “will not sit quietly by and watch this happen”, arguing that the “licence fee must not become a slush fund to be dipped into at will, leading to spiralling demands on licence fee payers to help fund the political or commercial concerns of the day”.

His argument is that sharing the £142.50 licence fee with ITV regional news — even if it is an apparantly worthy cause — would simply be the thin end of the wedge and that the corporation, in the words of one insider, “would be asked to fill potholes in Rotherham in seven years from now”.

Lord Carter of Barnes, the Communications Minister, who is behind the Digital Britain strategy, said that the Government would hold consultations about the plan, but not a “referendum”, as it prepares to push through the change in a Bill expected in the Queen’s Speech in November.

“We have not buckled in the face of BBC lobbying pressure,” the Labour peer said in a briefing for journalists and lobbyists yesterday. “This is the first time that the licence fee will not be going to the BBC as the sole provider of public service content, and that is significant.”

However, the corporation hopes that it could yet rally opposition to the plan, and senior executives took heart from the speech made by the veteran Labour MP Sir Gerald Kaufman, a former chairman of the Culture, Media and Sport Select Committee. He was one of several backbenchers who raised concerns in the Commons.

Sir Gerald said that many Labour MPs would oppose the move because it would impair and undermine the stability of the BBC and that taking a chunk from the licence fee revenue would not ensure the long-term viability of commercial services or solve the problem of regional news provision on ITV.

Neither the Conservatives nor the Liberal Democrats backed the plans, meaning that the question of BBC funding will be dragged into frontline politics in an election year. Jeremy Hunt, the Tory culture spokesman, said: “Should we not first consider giving it back to licence fee payers, as nearly three quarters have said they want?”

The stakes are high for the corporation, and in particular its chairman, who has raised the temperature over this issue. Critics believe that Sir Michael’s stance gives him little room for manoeuvre if he fails to persuade ministers to drop the scheme, or cannot get it voted down in the Commmons or Lords — and in that situation he would come under pressure to resign.

The Conservative MP John Whittingdale, who is chairman of the Culture Select Committee, said this week that Sir Michael had, in his view, “gone beyond his remit”, and added that the level and organisation of the licence fee were matters for Parliament, not for the BBC.

Crucial elements of detail were also missing from the proposal, not least how the £130 million would be administered.

Ministers want the annual fund to be “contestable” and will allow bids from local newspaper groups and other media companies who want to run an ITV local news service, with any extra unused cash potentially being made available for other types of programming.

Lord Carter also said that he wanted the BBC to consummate a merger between parts of its Worldwide commercial division and Channel 4.

Initial resistance on the part of the BBC to Channel 4’s embrace has been overcome, and the corporation was told that ministers were supportive, although the two broadcasters are yet to come to an agreement.

However, as Channel 4 welcomed the endorsement of a deal that could give it a £100 million-a-year boost to finances that are collapsing as the advertising market turns down, rivals were hinting that they might try to scupper the plans.

Dawn Airey, the chief executive of Five, said that her company could consider a legal challenge to any BBC Worldwide-Channel 4 deal, in an attempt to wreck ministers’ plans.

Calling the deal “a political fudge”, she said: “The transparency, accountability, competition and state aid issues that it raises will be closely monitored by the industry.”

Five, which is owned privately, also asked to merge with the state-owned Channel 4, at no cost to the taxpayer, a deal that she said had been unaccountably “rejected out of hand”.

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