'New opportunities'

Vodafone and BT are seen by analysts as among many potential bidders for the licences.

The auction is part of a long-term plan to release 400 MHz of spectrum, including analogue TV frequencies freed up by the forthcoming switchover to digital television.

The telecoms and media regulator is to consult on the fairest and most efficient way to auction the spectrum.

Under initial proposals published on Monday, a number of different packages would be offered to ensure competition in new services.

The regulator, which is required to ensure the maximum benefits to consumers from the process, said it envisaged a wide range of communication services being offered.

"Releasing more spectrum to the market will create new opportunities for innovation in wireless technologies, promoting competition and driving convergence," said its chief executive Ed Richards.