He warned that it would pose a threat to the political independence of the BBC and weaken its ability to invest in public service content. He was responding to the UK Government's Green Paper on the Corporation's future, published last March.

While saying that it was positive about the paper and welcomed many of the proposals the BBC has also said that the Green Paper underestimates how emerging digital technologies will transform the relationship between audiences and the media and presents significant challenges. In a speech at the Westminster Media Forum, Grade, speaking on behalf of the BBC, outlined the main responses while BBC DG Mark Thompson spoke of the radical change needed to fulfil the BBC's pivotal role in creating public value in a fully digital, on-demand world.

On the subject of scale and scope, the BBC accepted the Green Paper proposal for increased flexibility when it comes to adding or removing services, subject to a public value test, in response to changing audience expectations and technologies, said Grade.

But he added that the BBC believed that the Green Paper might have under-estimated the potential impact of new technologies in the years ahead. "Digital radio, digital satellite, HDTV, mobile platforms, pod-casting, on-demand delivery via broadband – these, and no doubt many more technologies as yet unveiled – also have the potential to transform the media landscape and provide new ways to build public value.

"So it is vital that the BBC remains agile, able to respond flexibly, on behalf of licence-fee payers, to the new opportunities that open up and the new ways that licence-fee payers wish to enjoy BBC content," he said.

The Governors, who have yet to consider the detailed plans from management to deliver the 'window of creative competition', are confident overall that it presents the best way to open up BBC commissioning and the licence fee to independent producers, whilst maintaining a sustainable in-house production and training base.

But Grade stressed that this system would only work if there is a level playing field between in-house and independent commissioning. "The Governors – and the Trust – will police this rigorously, by which I mean zero tolerance."

"In the near future the Board will consider detailed plans from management designed to ensure meritocracy and transparency in the way the BBC commissions all output. The Board will want to ensure that the BBC is fair to all the stakeholders and that the needs and interests of licence fee-payers are paramount."

Thompson told the Westminster Media Forum that the radical increase in consumer choice and power in the next phase of digital presented enormous creative challenges for the BBC. Thompson said that, to deliver the Government Green Paper's vision, the BBC had to change and squeeze every drop of value out of the licence fee.

"It will not be possible to deliver the BBC we've talked about without quite radical change. In the end, our first duty is to secure a strong and independent BBC in the very different, digital environment of the future. It's not easy, especially since it must be done in a way which protects and enhances, rather than damages, quality. The BBC's unique status and licence-fee funding means that we can do it, not just for early adopters or subscribers or any other privileged group, but for everyone."

He said that the age of digital media is particularly well suited to licence-fee funding to ensure a concentration of investment to ensure high quality, British content. "This is the era of free-to-view, free to share and adapt media, downloaded, stored, exchanged. At a moment when the pressure on commercial media-providers to focus on monetizing affluent subgroups of the population is relentlessly growing, universal access to the best news and information, educational and cultural content has never seemed more important.

"That's why we believe the licence fee will be an effective vehicle for delivering the BBC's public purposes through and beyond the next Charter. There's no reason to believe that the digital revolution will present fiscal or technical obstacles to the idea of the British public deciding pooling investment to guarantee universal access to great content. If the need remains, the means will be found."