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The BT Fusion is the fruit of more than a year's work and cuts the cost of using mobile phones to the same level as using a standard, wired phone. It also ensures a reliable signal strength as, according to BT, 19 per cent of mobile users have had problems with coverage at home.

Out and about the phone is a fully-featured mobile; back home (or in the office) it connects via Bluetooth to a base station unit known as the BT Hub (which doubles as a wireless router). The hub transfers calls to an ADSL connection,

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so long as you get your broadband direct from BT. Other ISPs are not supported.

Users will have a choice of two monthly mobile packages with landline calls charges added, starting from 5.5p for five minutes off peak. BT says that a 10 minute off-peak call will cost up to 95 per cent less than an equivalent call made from a mobile.

'We promised to launch the world's first seamless combined fixed and mobile service and now we're doing it,' said Ian Livingston, CEO for BT Retail. 'The service will transform the communications landscape and bring excellent value to customers.

'For the first time customers will be able to get the best of both worlds in one service - combining the convenience and features of a mobile with fixed line prices and quality.'

The launch handset will be a Motorola V560 clamshell camera phone.

BT Fusion will start with approximately 400 early adopter customers, before a nationwide launch in September. For more information and to register interest in the service go to www.bt.com/btfusion.