A former chairman of the BBC has warned that the removal of a compulsory payment for its services would sound the "death knell" for public service broadcasting.
Lord Grade of Yarmouth acknowledged that decriminalising non-payment of the licence fee, as advocated by MPs last week, was a "very attractive idea".
But he added: "If you remove the compulsory payment of the licence fee you inexorably push the BBC into a ratings war and probably into subscription, which would inevitably mean the death knell for the great tradition of public service broadcasting in this country."
The Tory peer urged ministers at question time to "tread exceptionally carefully" when examining the issue.
Government spokesman Lord Gardiner of Kimble said the tradition of public service broadcasting was very high and ministers would review the matter in the interests both of licence fee payers and the BBC.
Tory former Cabinet minister John Gummer, who sits in the Lords as Lord Deben, said it would be a "very sad day if the BBC, which has a reputation throughout the world, were undermined on the kind of underhand and technical pressures which are put about".
To cheers from peers, he said: "We really ought to recognise that on these (government) benches and the (Labour) benches opposite, there is very strong support for the independent BBC funded as it is and with sufficient funds to go on being the exemplar to the world."
Lord Gardiner said he didn't think the move agreed last week to review the possible decriminalisation of licence fee non-payment was intended to undermine public service broadcasting.
"Clearly the importance is that the BBC remains independent. That is a key feature of our national life," he said.
Tory former Cabinet minister and ex-journalist Lord Fowler said although he sympathised with the general argument for decriminalisation, he wondered if it was significant that some of the most enthusiastic reformers in this area appeared to be "declared opponents of the BBC".
He asked: "Will the Government ensure that in guarding the interests of those who cannot afford it they do not assist those who can afford to pay but simply want to evade the licence fee?"
Lord Gardiner said the potential impact on licence fee payers, the courts system and the BBC would be looked at.
"The review will be very thorough and clearly it is important we achieve the best outcome for licence fee payers and particularly those on lower incomes."
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