Carphone Warehouse plans to launch services in Europe

The launch of the service is seen as a challenge to British Telecom, which has 70% of the fixed-line market.

But BT says it is a "gimmick" because relatively few people are on TalkTalk.

Carphone Warehouse has said it already has 380,000 subscribers, and that another 40,000 are waiting to sign up in the coming 10 days.

'Big savings'

However BT's Gavin Patterson said: "This brings nothing new to the market. On two out of three of our packages we already offer free calls at evenings and weekends for all calls to anybody, regardless of their provider."

But Carphone Warehouse insists savings can be made.

Around half of home telephone bills are made up of calls to three or four numbers, Carphone Warehouse's chief executive Charles Dunstone said.

"They (TalkTalk users) can get big savings if they can get those three to four numbers to join," he added.

He also said the company was planning to launch TalkTalk in Europe.

BT cut its prices on Wednesday, in a bid to prevent its customers opting for deals offered by its rivals.