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HomeChoice's 45,000 subscribers will be transferred to Tiscali, as will its LLU network based in more than 300 BT exchanges nationwide.

Video Networks was an early adopter of local loop unbundling which it deployed, initially in north London, to offer fast Internet connections coupled with IP delivery of broadcast TV channels.

Since then the number of LLU installations and ISPs deploying the technology has soared - from a handful of lines when HomeChoice started operating to more than half a million

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today. Bigger names including BT and Sky have since announced plans to begin offering programming via the Internet, while Video Networks has failed to build on its early lead, despite offering additional services, such as movies and music videos.

Tiscali UK will integrate HomeChoice into 'triple play' product packages combining voice, data and television and other on-demand video services once the acquisition is completed later this month.

'This agreement represents a very important step for the Tiscali Group not only in the UK market, where Tiscali's position would be further strengthened, but also in the other markets, allowing Tiscali to position itself as a true triple play operator,' said Tommaso Pompei, CEO of the Tiscali Group. 'The triple play offer in the UK will be launched by the end of the year and will be immediately followed by the launch of the service in Italy and then in the other markets.'

Mary Turner, CEO of Tiscali UK believed that the agreement would underline Tiscali's position as a leading investor and innovator in the UK market.

'This will put us in a strong position to offer our customers an exciting and compelling package of existing and next generation communication and entertainment services,' she said.