Broadband bills are due to rise after the Government proposed to let BT include the costs of providing a decent internet service to millions of rural Britons in its wholesale prices.

Gavin Patterson, BT’s chief executive, said the company would spend between £400m and £600m to upgrade around 1.2 million lines that cannot current get a 10 megabits per second connection. Work is due to be completed within five years.

Matt Hancock, the digital minister, told The Telegraph that bills are likely to rise as a result.

He said: “Nothing is going to be paid for by taxpayers here. We have already subsidised superfast broadband to the tune of £1.7bn.”

“It’s likely that it’ll be paid for through every broadband bill.”

The proposed agreement between BT and the Government covers most of the final 5pc of homes and business located too far from a roadside cabinet to get superfast broadband at 24 megabits per second or faster. New technology will be installed in rural cabinets to send more powerful broadband signals along long telephone lines.