The BBC licence fee could be scrapped under plans being considered by the Culture Secretary.

Lisa Nandy is exploring alternative funding models for the corporation and reportedly favours axing the levy when its current agreement runs out in 2027.

She is said to want to turn the Beeb into a mutual organisation to give direct control and ownership to the public.

Ms Nandy is also said to have looked at paying for the BBC through general taxation.

A Whitehall source told the Sunday Times: “Lisa does not believe that the licence fee is financially sustainable.

“But she believes that our national broadcaster should be owned by the nation: the money would go in from taxes but citizens would own it and be involved in decisions about its strategic direction.”

The royal charter — the agreement between the Government and the BBC - expires at the end of 2027.

It comes as the broadcaster is facing challenges including competition from streaming services, while it has been rocked by a series of scandals.

A government source said: "Funding the BBC through general taxation is not a realistic possibility, and is not being seriously considered."

A BBC spokesperson said: “We want everyone to get value from the BBC, which is why we’re focused on delivering what audiences want from us – trusted news, the best homegrown storytelling and the moments that bring us together.

“The public cares about the BBC and later this year, we will launch our biggest ever public engagement exercise so audiences can help drive and shape what they want from a universal and independent BBC in the future. We look forward to engaging with government on the next charter.”