The BBC has agreed to meet the cost of free TV licences for viewers over the age of 75, the Culture Secretary John Whittingdale has said.
Addressing MPs in the Commons, he said the change would begin to be phased in from 2018-19 and the corporation will bear the full cost - currently £145.50 per person - by 2020-21.
ITV News' Deputy Political Editor Chris Ship reports:
The announcement came in response to an urgent question from Labour after the plans were reported over the weekend.
Mr Whittingdale also revealed:
Legislation will be brought forward in the next year to "modernise the licence fee" to cover public service broadcast catch-up TV
The licence fee is also expected to rise in line with the consumer price index (CPI) measure of inflation
Responding to the announcement, shadow culture secretary Chris Bryant called it an "utter shambles" as he hit out at the proposals being briefed to the media..
He also said Labour would oppose the plans if they amount to a "smash and grab raid" on the BBC.
Chris Ship says the cost of the free licences is approximately 17 percent of the BBC's total annual budget.
The Chancellor is expected to cut £650 million from the BBC's budget - the amount the Government currently spends on providing free television licences for the over-75s - when he delivers his Summer budget.
In a statement, Mr Osborne said the BBC taking on the "significant cost" of TV licences for the over-75s will ease "some of the pressure on taxpayers who have to meet the country’s welfare bill".
The BBC's director-general Tony Hall said: “We have secured the right deal for the BBC in difficult economic circumstances for the country."