The phone company, which has a legal duty to provide a "universal service", currently operates about 141,000 boxes across the UK.

Phonebox Facts

First one: 1884 141,000 in the UK 2m calls a day 15% of 999 calls 45% Childline calls Vandalism: �1m Theft costs �6m Min charge 20p

It has taken the decision because of a sharp drop in usage - down more than a third in less than two years as callers switch to mobile phones.

It is the first time in more than 100 years that the network is not being expanded.

"There has been a reduction in recent years in both the revenue and the number of calls made and most of this is down to mobiles and, in particular, the growth of prepaid mobiles," said BT.

Calls tumbled

The first public payphone was introduced in 1884, eight years after the invention of the telephone.

Free surfing is on offer for six months

BT has already taken steps to recoup some of the lost income from phone boxes by increasing the minimum cost of a phone call to 20p.

Les King, from BT Payphones, said the firm was committed to maintaining the current network and was looking at new ways of increasing the revenue it gets from them through such initiatives as selling advertising on the glass panels.

Another measure being rolled out at the moment is the launch of multi-media phones, which can by used to surf the internet, send emails or text messages.

Text phone trials

Six hundred of these multi-media terminals have been installed, with free access for users since last week.

Mr King, who said the free service remains until June, said 1.7 million users had tried the internet phones already.

A separate range of text phones, with email and text message capability, are also on trial in Brighton at the moment.

The switch from red boxes reduced vandalism

Although the proportion of phone boxes which work has increased to more than 96%, vandalism still costs �1m a year, while theft from coin boxes costs BT a further �6m a year.

The rethink on phone boxes comes at a time when BT bosses are trying to turn round their recent sluggish financial performance, which has led to the share price halving in the past 12 months.

3G debts

Bosses are meeting their biggest City investors on Monday to explain their plans to restructure the company and increase the returns for shareholders.

There are growing suggestions that BT is rethinking its plan to float Yellow Pages division Yell, and may demerge the entire business instead.

BT is also planning to float off a chunk of its Cellnet wireless business and other divisions to slice a third off a debt pile heading for �30bn ($43.8bn).

Like many telecoms firms, BT has found itself facing a huge bill to buy licences to operate next generation mobile phones, with yet more needed to be spent to set up the infrastructure to support them.