The BBC is likely to radically cut back on plans to develop services for mobile phones and handheld computers after the Graf report said the BBC should not be developing services "specifically for new platforms."

The 100-page report into the corporation's internet operations also recommended the BBC stick to delivering "free" services closely aligned to its core public service remit.

The BBC responded by saying it would close five internet sites - representing just 2% of its overall internet traffic - but hinted that further sites and services could be hit after the BBC governors delivered a new online remit in October.

The BBC director of new media and technolgoy, Ashley Highfield, said the corporation would be applying the "public value test" outlined by director general Mark Thompson last week to its online services.

This is expected to see a pruning of the BBC's lifestyle content as well as a rethinking of provision to mobiles and PDAs.

"The BBC must remain mindful of its obligations to provide public service content, free at the point of delivery," the Graf report said.

"In this context, new platforms, such as mobiles and PDAs, must be given partial considerations."

Yesterday Mr Highfield said the report was an "MOT" of the service, and said there were some valuable lessons to be learnt.

"We recognise that the report contains some important advice, commentary, and criticisms of the service and in the coming months we'll be considering them carefully."

However, he stressed that the BBC had a role in delivering services to new platforms.

"We see our role to use new media: the web, broadband, mobile, and interactive TV to build public value...To add to the democratic, creative, social and educational fabric of the nation by new two-way technologies and services that are increasingly universally available, and increasingly used.

"New technologies and services that will bring about a flexible, responsive BBC... the BBC on-demand."

However Philip Graf - the former Trinity Mirror chief executive charged with investigating the BBC's internet activities - stressed that the BBC should take into consideration the market impact of any new services and keep them closely allied to programme content.

"BBC Online should adopt an approach to delivering its core services via new technology platforms, which take into account its potential impact on competitive markets," he said.

The BBC "should avoid investing in and developing content and services only loosely related (eg shared subject area) to the content in its broadcast services," he wrote, and claimed that it should not "develop such services around all topics of interest (such as entertainment and lifestyle) - in these areas, the wider commercial market already provides an ample range and quality of service."

In their submissions to the report, commercial rivals accused the BBC of allowing its online activities to grow unchecked, driven by a culture of "imperialism" in which considerations of public value or market impact were discarded.

Rivals welcomed the report saying it should put a brake on the BBC online expansion.

"It clearly states that the BBC doesn't have to be doing everything in every single market to be delivering public value," said a spokeswoman for ITN, which provides video new bulletins to third generation mobile phone users on British service 3.

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