BT has seen income from its traditional phone business fall

The group said it had won 26% of the market and now had 3.66 million broadband customers.

Regaining pole position, which it lost about a year ago, helped it increase annual profits by 15% to �2.49bn in the year to the end of March, BT added.

Separately, it announced a �750m deal to provide broadband and phone services for Post Office customers.

The Post Office contract, which runs for four years, will combine high speed broadband and telephony, as well as equipment and applications such as web-based email and anti-virus protection.

"This is a landmark agreement between two of the UK's leading and best established businesses," said BT Wholesale chief executive Paul Reynolds.

"It will help to quickly establish the Post Office as a key player in an exciting, dynamic and ultra competitive market for broadband-based services."

New focus

Chief executive Ben Verwaayen said the company had finished the year "with a terrific all round performance".

The group also announced it would be returning �2.5bn to investors through a share buy-back scheme within the next two years.

The importance of the broadband market was underlined by news that revenues from its traditional fixed-line phone business had fallen 3%, which BT said was "continuing recent trends".

BT is hoping to tempt more broadband customers through its BT Vision service which mixes digital TV channels, received via a Freeview decoder, with on-demand programmes delivered via broadband.

The service's set-top box, which competes with products from rivals including BSkyB, also allows users to record up to 80 hours of television programmes.