BSkyB pioneered multi-channel TV in Britain

They are currently in dispute over how BSkyB will offer ITV channels to its subscribers.

And ITV Digital has previously complained that BSkyB was abusing its dominant position in the pay-per-view TV market.

BSkyB was an original shareholder in British Digital Broadcasting, the company that eventually became ITV Digital, but was forced to divest by a European ruling.

That meant that Carlton and Granada, which have long experience in the free terrestrial broadcasting, had to go ahead without BSkyB's technical know-how and experience of selling packages to subscribers.

Government plea

But even if a deal does not go ahead, the two firms seem likely to step up their campaign for government help for the struggling digital sector.

Earlier this year, ITV Digital criticised the government for promising technological advances in broadcasting, while failing to support the private-sector firms in the business.

Now, ITV Digital is pushing for government permission to increase its national coverage - currently just 50% - and wants the state to encourage people to buy digital-enabled TVs and set-top boxes.

Under current government plans, all TV broadcasting, whether free or paid, is set to switch over from analogue to digital in 2006-10.

Digital TV allows broadcasters to push more channels within a smaller frequency, and is capable of operating as a platform for a wide range interactive services - everything from ordering pizzas to booking holidays.