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The labels are understood to have agreed a one-off licence payment from TDC, rather than a revenue-sharing deal.

The songs, which will play on computers and any music-enabled phone – but not iPods – will be protected by digital rights management (DRM) software, meaning that customers will periodically have to renew access to the tracks using a key provided by TDC. When customers cancel their TDC subscription, they will stop getting new keys and their access to the tracks will expire.

"This is going to change the way people consume music," Frank Taubert, chief executive of 24-7 Entertainment, which is providing the back-end technology for TDC's service, said.

"In the past there have been barriers to entry in the digital music market, for instance questions about pricing and also DRM, but what our service will show is that if you give the consumer access to music via a base subscription model, you make the barriers to entry very low."

Asked how TDC could make the one-off payment to the labels without increasing their subscription fees, Mr Taubert said: "Think of this as money coming out of the budget that would usually go to acquiring new customers and retaining existing ones. The theory is, this new service will make the network very 'sticky' for the customer."

A spokesman for EMI said the company "did not comment on contractual terms."

Music companies have long been looking at ways to reduce their reliance on sales of albums and individual tracks and embrace so-called 'all you can eat' music packages. The sticking point has been the share of a monthly tariff – or other fee – to which they are entitled.

Earlier this month it was reported that Apple was in discussions with the major labels to introduce a similar package allowing customers access to unlimited music in return for paying a $100 premium on an iPod.

Apple is thought to have offered only $20 of that premium to record labels – an offer which the labels have rejected.

Nokia, meanwhile, has successfully wooed Universal to sign up to its new Comes With Music phone, which is due out in the second half of the year, and which will give customers full access to the label's millions of songs from the time they sign their phone contract.

A spokesman for the BPI, the music industry body, said: "All of our members are talking to the ISPs, but the two sides are still too far apart for anything to happen imminently." ISPs would also have to show they were willing to take stronger measures to clamp down on illegal downloading in order for the labels to reach any kind of deal, the spokesman said.

It is understood that any deal would involve the labels' music being protected by DRM, meaning that if a customer changed their ISP, they would be unlikely to be able to keep any music they had downloaded.

Customers would probably be able to play the music on any phone and some media players, but not on iPods.

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