BT prices have been regulated since 1984

In future, BT will be free to increase or reduce line rental prices for its 16 million customers.

Telecoms regulator Ofcom, which decided to lift the controls, has said market forces were sufficient to ensure the BT's prices stayed competitive.

BT announced a series of price cuts on Monday, and said ending the controls would give them greater flexibility to offer customers a better deal.

Monopoly situation

Price controls were introduced when BT was privatised in 1984.

Our customers want to see a company that can react quickly to market changes and price sensibility BT spokesman

At the time, BT had a monopoly and the controls were put in place to ensure that it did not take advantage and ramp up prices.

However, the home telephone market has changed dramatically in the past 22 years.

More than 10.7 million households and businesses no longer have BT as their phone provider, according to Ofcom figures.

As well as landline rivals, it is also under pressure from mobile phones - whose use accounts for 31% of all UK call minutes.

Sensible pricing

BT has long lobbied for price controls to end, arguing in favour of market forces.

"Our customers want to see a company that can react quickly to market changes and price sensibility," a BT spokesman told BBC News.

"In a highly competitive situation we know that if we keep our prices low we will attract customers, raise them and we risk losing out," he added.

Nevertheless, BT has agreed to restrict increases in basic line rental, protecting those for whom this is a large chunk of their phone bill.

To coincide with the end of price regulation, BT announced that it would cut the cost of some of its main telephone call package deals.

The cost of two key phone package deals - BT Together options 2 and 3 - will be cut by almost a third from 1 August, the company announced.

But it was not all good news for BT customers, particularly those on option 1. The firm announced that it would start rounding up the cost of calls to the minute, many other phone providers charge by the second.