Cable and Wireless accused ministers, regulators and BT of hampering competition in the high-speed internet market and allowing Britain to fall behind Europe.

Chief executive Francesco Caio told a parliamentary inquiry that C&W was unable to offer enough new services because of BT's stranglehold on the market.

"Sadly, BT's retention of some 70% of the market is not testimony to innovation and entrepreneurialism but to its ability to frustrate and stifle innovation among its competitors," he said.

Mr Caio said that Telecom Italia's rival in Italy, Fastweb, had cabled 200,000 homes and was offering high-speed web access, unlimited voice calls and video-calling through digital TVs to neighbours for a monthly fee of about €80 (£53).

He said the broadband market in France had become one of the most competitive in Europe, and Britain had lost its position as a pioneer of telecoms liberalisation.

· Mr Caio praised new regulator Ofcom.