Further pressure has been piled on ministers responsible for delivering the UK's next generation broadband infrastructure, after it emerged a flagship scheme to connect 22 UK's cities has foundered.

Champoined by chancellor George Osborne, the £150m Department for Culture, Media and Sport programme to link up 22 cities, currently beyond the reach of BT and Virgin Media's networks, with superfast Internet connections of between 80 to 100 Mbps by 2015, has instead been downgraded to a voucher scheme.

Up to 200,000 business premises and 1.7 million households were to have been served in the areas of market failure, and high-speed wireless links were to have been provided to an additional 3 million residents, under plans outlined in previous Coalition Budgets.

However, legal action from BT and Virgin Media has forced the Government to drop plans to seek permission from the European Union to ensure the fixed line element met state aid rules.

Instead, the cash will be allocated in voucher form to allow small businesses to upgrade their connections – at lower minimum speeds of 30 Mbps.