BSkyB had claimed the service was receiving state aid as it was being funded by the licence fee, alleging that it was unfair and illegal under European Union rules.

BBC News 24 is delivered free of charge to cable and satellite operators, and carries no advertising. It competes with commercial stations such as Sky News.

The commission ruled that funding from the licence fee must be considered to be state aid, which falls under European law to ensure fair competition in the marketplace.

But it said that under EU rules, "such aid might be compatible if it is granted as compensation for the delivery of services of general economic interest, as defined and entrusted by the member states".

The statement also said: "The Commission concludes that the UK did not abuse its competence by defining 24-hour news channel with specific features as described above as part of the public service remit for broadcasting.

"Also, the Commission found that the financial means granted to the channel did not exceed its actual costs and are therefore proportionate to the public service.