A REPORT into the future of BBC funding recommends increasing the licence fee in line with inflation and raising the amount of money it makes through commercial ventures, the corporation has said.

The broadcaster made the disclosure after a newspaper report alleged that a review into the organisation's funding suggested replacing the licence fee with a subscription service from 2020.

It was reported yesterday that the majority of a 12-strong centenary review set up by James Purnell, the former Labour minister-turned BBC director of strategy and digital, supported the change. It also reported that the review recommended freezing the licence fee until 2020.

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But a BBC spokesman said: "The report recommends that the BBC pursue an inflationary licence fee increase with greater commercial revenue. No subscription model is recommended."

The future funding of the BBC is in the spotlight, with its charter up for renewal in 2017.

On Friday, Justice Secretary Chris Grayling mooted the idea of making the non-payment of the licence fee a civil rather than criminal matter to ease the pressure on courts.

Cases of people accused of evading the £145.50 annual fee accounted for in excess of one in 10 of all criminal prosecutions last year - with 155,000 convicted and fined.

Culture Secretary Maria Miller said the proposal, backed by more than 100 MPs, was an "interesting" idea that could form part of negotiations over the renewal of the BBC charter.

BBC Director General Lord Hall last week confirmed digital TV channel BBC3 was set to be axed.