The report identifies ways phone users could save money

The House of Commons' Public Account Committee said many people paid about �18 per year for a handset when they could buy a similar model for �7.

The report said consumers could be missing out on millions of pounds of savings because the telecoms market is too "confusing".

It called on regulator Oftel to encourage consumers to switch deals.

BT was privatised in 1984, but it still has 75% of the UK domestic market.

KEY FINDINGS The market is confusing for consumers Consumers may not have the right information to identify the best deal Consumers may be confused about what they are paying at present Many consumers are not taking advantage of existing opportunities to save money Oftel was remote from consumers and did not do enough to help them Ofcom should actively encourage consumers to switch supplier Ofcom should conduct a research exercise into the information needs of consumers

Many telephone bills do not provide enough information to allow customers to determine the best tariff and discount options, the PAC report said.

The differing ways in which companies quote phone tariffs also meant that comparisons could be difficult.

The committee criticised the "tiny slice" spent by regulators on publicity and accused Oftel of being "remote".

It called on the Office of Communications (Ofcom), which took over regulation in December 2003, to provide guidance on how consumers can identify the best supplier, using a series of typical phone bills as case studies.

The report identifies a number of ways in which people could make savings.

Of particular concern to the committee was the uptake of the BT Light User Scheme, which gives discounts of up to 50% on line rental charges to people who rarely use their phones.

Around 3.5 million customers - some of them poor - could be missing out on savings, it said.

'Save money'

And customers on BT's Standard tariff, who make international calls, could halve the cost if they used another company to make overseas calls.

Committee chairman Edward Leigh MP said: "Many consumers are not getting as good a deal as they could on their telephone bills. They could save money by either switching supplier or changing their tariff.

"It is unacceptable that BT retains around 70% of the total market 20 years after privatisation.

"There is no doubt that consumers find the telecommunications market confusing, and need more help to make properly informed choices."

A BT spokesman said it was right to shop around and the company provided competitive deals.