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Based on current growth trends, Internet-based spending could rise to £40 billion by the end of this year and hit a staggering £162 billion in 13 years' time, according to research by independent price comparison service uSwitch.com.

Online sales accounted for just 2 per cent of total retail spending in 2002.

That is expected to rise to 15 per cent by the end of 2007 and 40 per cent by 2020, according to the study, conducted with the Centre for Economics and Business Research and market research firm YouGov.

Broadband has become a way of life for over 13 million Britons and online sales reached £3.7 billion in the four weeks to

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Christmas - a 50 per cent increase on 2005 - figures from IMRG, the e-retailing industry body, have shown.

Steve Weller, head of communication services at uSwitch.com, said: 'The dramatic surge in online shopping last Christmas shows that British consumers are already savvy to the benefits of buying goods and services over the Internet.

'Over the last year, broadband prices have fallen by up to 17 per cent, while speeds have gone up, making it cheaper and simpler for consumers to log on instead of going out to the shops.'

Eight million households currently spend an average of two hours per day shopping online, the YouGov study of 15,323 broadband users found.

The average household currently spends £980 per year on online goods and services - representing almost 10 per cent of their total annual shopping bill.

The most popular products bought over the Internet include holidays, music and films.
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The study also showed that households could save £500 per year, or £42 per month, by buying goods and services online as opposed to the high street.

Online shoppers typically save 21 per cent on services, 15 per cent on travel and leisure activities and 13 per cent on grocery items.