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Mobile phone firm Carphone Warehouse has launched a call and internet package it claims will cut home phone bills by 60%.
Customers who pay Talk Talk's monthly service fee of £20.99 will be able to make unlimited local and national calls from their land-lines.
The package includes a broadband internet connection and unlimited calls to 28 European countries.
Carphone's total cash investment for this service is about £110m this year.
The service also requires a one off connection fee of £29.99.
The company said it expected the investment to lead to an operating loss from the broadband business of around £50m in the current financial year to 2007.
Unbundling
It has set a target of having the service available in 1,000 telephone exchanges by May 2007 - covering about 70% of the UK population.
Charles Dunstone, Carphone Warehouse chief executive said: "For too long the British public has been charged costly fees for high speed internet access, or has had to use slow internet connections."
If the local exchange has not been unbundled, customers will initially be connected via BT's wholesale service and then moved across at a later date.
Analysts predict the latest offer could spark a price war and described the offer as a "landgrab" on the broadband market, increasing the pressure on BT.
Carphone Warehous currently has 2.6 million residential voice customers and aims to have 3.5 million by March 2009.
Competition
The move is the latest from a series of companies trying to tap into the broadband market.
The number of unbundled lines has increased six times since May 2004, according to watchdog Ofcom.
BSkyB is also preparing to enter the broadband connection marketplace and said it would launch the service in the latter part of this year.
French Internet service provider Wanadoo has announced it will move into the UK this summer.
It is conducting a test run in 500 customers in Leeds, which, if successful, it will roll out in about 200 exchanges.
Ten million people currently have high-speed broadband internet access, but this figures is expected to rise to 19 million by 2010.
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