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Virgin Media will bundle television, on-demand video, broadband and fixed-line and mobile phone services in a series of price packages in a bid to become a major force in the entertainment and communications industry.

Never one to avoid the spotlight, BSkyB responded by announcing plans for a new deal to show its content via the popular Freeview platform.

Virgin Media launched to great pomp, with entrepreneur Richard Branson joining the bosses of cable operator NTL at the Royal Opera House in central London.

'For the first time there is a single brand set to provide a more extensive range of television entertainment, broadband and communication services,' he said.

NTL bought Virgin Mobile in 2006 in a deal that made Branson the company's largest shareholder.

The cable operator had been dogged by a reputation for poor customer service. The rebranding to Branson's ubiquitous Virgin and a high-profile media campaign involving actress Uma Thurman offers a fresh start.

'Virgin takes us to a new level,' Chief Executive Steve Burch said. 'We are a very serious rival to our competitors.'

Virgin Media said it would offer two of its packages for £20 a month, three for 30 pounds and four for £40.

At the top of the range, it will also offer a Very Impressive Package (VIP), which gives all four and a V+ high-definition-enabled personal video recorder, high-speed Internet, unlimited UK landline calls and a free mobile phone with a number of free minutes and text messages for 125 pounds.

It also announced the launch of a new channel, Virgin Central, which will offer on-demand programming with such programmes as 'Little Britain', 'Nip/Tuck'

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and 'West Wing'.

They also announced plans to extend their reach from 55 percent of the country now to 97 percent by the end of 2007.

The launch puts the group in direct competition with James Murdoch's BSkyB, the largest pay-TV company with 8.4 million subscribers, and Virgin Media wasted no time in attacking its rival.

'I think Sky overcharges its customers right now for sports and movies,' Chairman Jim Mooney said. 'They continually raise those prices, and we think that's a weakness we can exploit.'

A BSkyB spokesman responded that the rate at which cable customers were switching to Sky suggests they want to save money and not give 'more than 1,000 pounds a year to NTL-Virgin'.

Analysts said the new group must offer an enhanced service for customers. It currently has 3.3 million TV subscribers and 3 million customers taking the broadband service.

'Virgin has to innovate,' Jupiter research analyst Ian Fogg said. 'Today's announcements of a new subscription video-on-demand TV channel should be just the start.'

Mooney later told Reuters his group would also aggressively attack BSkyB on the regulatory front, saying it had too much influence in the UK, especially on carriage and sports rights.

BSkyB announced on Thursday plans to broadcast its Premier League football, movies and entertainment on subscription channels on the Freeview platform, which is used in some 9.3 million households.

The announcement could boost further still the popularity of Freeview and provide further competition to Virgin. A spokesman for the new group dismissed it as a 'hastily assembled announcement (and) a response to the launch of Virgin Media'.

The announcements mark the latest spat between the two companies, which publicly clashed last year when BSkyB bought a 17.9 percent stake in broadcaster ITV, effectively bringing an end to NTL's plans to buy the company.

The cable operator has since lodged a complaint with regulators, and the purchase is being investigated.

Mooney said despite the setback, he would still like to work more closely with ITV in sharing content across their different platforms and that Virgin Media would bid very aggressively for all aspects of content including sports and film.