The company is expected to reveal a range of new call packages for customers on Tuesday and is expected to reduce the amount it charges for line rental. It is also expected to begin heavily marketing internet - or "VoIP" - calls as a way for customers to cut their bills further.
BT currently offers three packages for its telephony customers. Option 1 costs £11 a month and provides evening and weekend calls at 5.5p per hour. Option 2, with free evening and weekend calls and 100 free text messages, costs £16.50. Option 3 costs £25.50 a month and offers unlimited free calls to landlines and 25 per cent off calls to mobile phones.
The new retail prices will be confined to BT's calls packages and will not extend to broadband services, which are still regulated by Ofcom.
The move comes in response to competitors slashing their prices for fixed-line calls and offering "free" broadband internet connections to customers who take a bundle of services.