BT has kick started a broadband price war by announcing a super-fast 40 megabit per second service for less than £20 a month, undercutting arch rival Virgin.

Next week customers, for the first time, will have a choice of two super-fast broadband providers after BT announced it had laid enough fibre-optic cables under the street to start its 40Mb a second service.

Normal broadband, which often uses pre-Second World War copper wires, usually runs at a speed of about 1Mb or 8Mb a second at most. Only by sending the data down a fibre optic cable can consumers enjoy very quick speeds – usually five times as quick as the previous fastest available.

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