BT will undercut the pay-TV services of Sky and NTL and high-street rental shops such as Blockbuster in the home film market as it unveils BT Vision TV service, charging consumers under £3 to rent the latest films.

Consumers will be able to rent films for 24 hours, download them through their broadband connections and watch them on their TV. Alongside price details of the new service, BT will also announce a deal with Warner Brothers to bring new titles and classic films, including those of Stanley Kubrick, to its on-demand service.

BT - which has already secured deals with content companies such as Buena Vista International - has also added concert and video footage from artists including Radiohead through a deal with EMI signed over the weekend.

The service will also show a clutch of Premiership football games "near live" - screened in the evening after kick-off.