The download service, first announced in March this year, will be available to almost 6m of BT’s broadband customers in the UK and aims to help combat piracy by cutting back on its profit margin.

The telecoms company admitted it was working on the project in March this year after a leaked tender document said the music service would launch in the near future.

A BT spokeswoman said the service is still on track but the company is still in talks with labels about the proposition. “We are working with the music labels to develop a music service for BT’s customers,”. She said. “We’ve promised to launch the service without taking any margin ourselves and this should enable the labels to provide a really compelling offer.”

According to reports, BT plans to provide a free customer-facing service by dropping their profit share for the first six to nine months, but it then plans to introduce a subscription model.

BT would not give an indication of a launch date but if launching soon, it looks set to be among an increasingly crowded market of online music services from companies including BlackBerry and new services such as Boinc, which plans to launch early next year.