BT yesterday dumped its BT Openworld consumer internet brand and signed up with Yahoo! in a tacit admission that it needs help to hit its target of attracting 5m households to broadband within three years.

BT Yahoo! Broadband will be launched in September backed by a multi-million pound advertising campaign.

BT will pay Yahoo! a small part of the £29.99 a month it will charge for the service - taking a hit on revenues to increase the number of users and shorten the time it takes before it starts making money out of high speed internet.

It will also pay Yahoo!, which has 15m UK visitors a month, a fee for every subscriber attracted through its site.

Yahoo! will be paid for the 330,000 Openworld subscribers BT is moving on to the service over the autumn. Openworld, which the company spent millions of pounds trying to establish, will remain in use for business customers.

BT retail head Pierre Danon admitted that BT had failed to produce a compelling internet portal which offered people more than just fast internet access - which 250,000 customers get at £27 per month through BT Broadband. Most people with broadband are early adopters who already use the internet and are attracted by the speed of the service - up to 10 times faster than traditional modems.

Mr Danon said the company must offer more than just speed, since many people in Britain do not spend anything like the £27 on internet access that broadband costs. "If you are not a heavy user why would you triple your spend just for fast internet access?"

BT hopes services such as a personalised home pages for each family member, internet security and parental controls will attract customers who have seen no need to sign up.

The deal is likely to infuriate Microsoft which is working with BT on the broadband use of its XBox game system and hoped to sign a broadband deal. Mr Danon said: "We did run a comparison but decided to go with Yahoo!"