The BBC's licence fee could be scrapped in the long-term future and be replaced by a subscription model, according to the culture secretary.
John Whittingdale, speaking in the House of Commons, told MPs the £145.50 ($226.49) annual charge was "regressive" because of its flat, poll tax-like rate.
"A subscription model could well be an option in the longer term, but cannot work in the short-term because the technology is not yet in every home to control access," the top Tory said.
The minister said the government's green paper into the national broadcaster found there were three "viable" options for the BBC's short-term future, including a reformed licence fee, a household levy or a hybrid funding model.
"In the longer term, we should consider whether there is a case to move to a full subscription model – all have advantages and disadvantages," Whittingdale added.
But the BBC said the government's proposals, which come ahead of its charter review, would create a "much diminished, less popular" broadcaster.
"That would be bad for Britain and would not be the BBC that the public has known and loved for over 90 years," a BBC spokesperson said.
"It is important that we hear what the public want. It should be for the public to decide whether programmes like Strictly or Bake Off, or stations like Radio One or Two, should continue."
"The BBC is not owned by its staff or by politicians, it is owned by the public. They are our shareholders. They pay the licence fee. Their voice should be heard the loudest."
The proposals come after the BBC controversially agreed with the government's plan to fund the cost of free licence fees for the over 75s, rather than the Department for Work and Pensions (DWP) paying for the policy.
The move will be phased in from 2018-19, with the BBC taking on the full costs from 2020-21.
Tony Hall, the director-general of the BBC, said: "This agreement secures the long-term funding for a strong BBC over the next charter period.
"It means a commitment to increase the licence fee in line with inflation, subject to charter review, the end of the iPlayer loophole and the end of the broadband ring-fence.
"In the circumstances, the BBC has agreed take on the costs for free licence fees for over-75s, and after the next parliament, will take on the policy."
But Labour's shadow culture secretary, Chris Bryant, hit out at Whittingdale and accused the government of leaking details of the agreement to the press. The Rhondda MP branded the alleged move an "utter shambles".