A committee of MPs has voted to give the Government the power to decriminalise the non-payment of TV licence fee.
They voted in favour of an amendment to the Deregulation Bill that will require an examination of reform options and give ministers the power to make it a civil offence.
The BBC said that the move could cost them as much as £200m a year.
Following the committee's decision to approve a review, BBC director of corporate and public affairs Andrew Scadding said: "The licence fee is by no means a perfect system, but for 40p a day it does provide a television, radio and online service that is the envy of much of the world."
A review of the penalties for non-payment of the TV licence is set to move a step closer today, paving the way for possible decriminalisation.
MPs are expected to back an amendment to the Deregulation Bill that will require an examination of reform options and give ministers the power to make it a civil offence.
Significant cross-party backbench support to remove the threat of a criminal record and jail sentence for non-payers prompted the Government to propose the review, which Labour also backs.
The BBC, which had warned an immediate switch would hit funding for its services by encouraging evasion, has signalled a willingness to discuss changes as part of negotiations over the renewal of its charter, due in 2017.
Television viewers who fail to pay the licence fee face having their BBC channels blocked under plans being considered by ministers.
According to The Times (£), the radical move is seen as an answer to growing concerns at the potential for evading the annual charge.
MPs will debate next week scaling down the offence to a civil matter, amid fears that the courts are being clogged up and the poor criminalised. The change would unburden the criminal courts, which deal with 180,000 people a year for failing to pay the charge.
The BBC, however, has warned that removing criminal penalties for non-payment will have a devastating impact on its funding as rates of evasion soar.
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 said today
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.
The Sunday Times said 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.
The Deputy Prime Minister has said he would be concerned about any move which would "lessen the signal" that people should pay the TV licensing fee, after plans revealed that the Government was considering easing pressure on courts.
He said: "We will look at it but I think you need to be aware that if you have a 1% drop in the payment of the licence fee, that would lose you money which at the moment would cover the money for 10 local radio stations.
"So it's important that people do pay their licence fee and I don't want to see any relaxation of that because I'm a great fan of the BBC. I think a lot of people rely on the BBC locally and nationally for their news and for a lot else besides.