BT has announced plans to undercut Skype prices on its own VoIP service, and will launch a new service in February combining its two existing VoIP offerings.

The telecoms giant claimed that it will undercut Skype on 50 of the most popular international calling destinations.

The move would mark a distinctly higher profile for BT's VoIP services despite concerns from analysts that it will undercut its fixed line business.

Meanwhile Yahoo has announced that it will also undercut Skype by charging just one to two cents a minute in 180 countries.

The new version of Yahoo Messenger for text, voice and video communications will be introduced in the next few days.

It will include 'Phone Out', offering low per-minute charges for calls from computers to phones, and 'Phone In', offering a low-cost subscription service for phone calls to computer users.

Yahoo will charge one cent per minute to Yahoo Messenger users calling the US from anywhere in the world, and two cents a minute to 30 other countries including Australia, China, France, Germany, Italy, Japan and Korea.

Ian Fogg, broadband and VoIP analyst at JupiterResearch, said: "This is a very dynamic market and there is an acceptance that using the internet and the PC to make phone calls is going mainstream.

"All the leading players have to decide what portfolio of products they are offering and what advantage they can have over the others.

"Most importantly it highlights the relationship between telcos and ISPs. Telcos like BT are starting to realise that they can offer more themselves, and there is a growing issue of competitiveness between some of the leading players. "