BT is thought to be limiting download speeds during peak times on its cheapest broadband package, slowing down video services such as the BBC iPlayer.

The ISP confirmed that Option 1 broadband customers have their bandwidth for streaming videos cut from 8Mbps to under 1Mbps between 5pm and midnight, after a BT customer informed the BBC of his experience.

BT said the bandwidth cut took place "in order to optimise the experience for all customers".

The BBC iPlayer will stream video at three different speeds; 500Kbps, 800Kbps, and 1.5Mbps. The BBC suggested that BT's policy would force users to use the lowest quality setting.

BT said that it explained its limiting policies on its website. "We do limit the speed of all video streaming to 896Kbps on our Option 1 product, during peak times only," says the clause. However, this is not explained in the terms and conditions users are asked to accept when they first sign up for BT Broadband.

Steve Weller, from price comparison site, told the BBC: "Companies operating a traffic management policy usually hide their terms deep in the terms and conditions, making it difficult for customers wanting to get out of a contract".

"Where we manage bandwidth, we do so in order to optimise the experience for all customers, whatever they want to do online. We believe there is a real issue that content owners like the BBC need to address and we are currently in discussions with the BBC executive to ensure that our customers get the best possible experience in the future," BT said.