The BBC was made yesterday by its new regulator to suspend its £150 million free online education service, BBC Jam, after warnings from Europe that it was damaging the commercial sector.

The decision by the BBC Trust left at least 170,000 children aged 5 to 16 without the corporation’s schoolwork help and is a blow to the Government, which had demanded that the BBC develop a free service despite industry objections.

Chitra Barucha, the acting chairman of the BBC Trust, said that the corporation faced “the ongoing prospect of [legal] challenge if action is not taken”, and demanded that Mark Thompson, the Director-General, try to find an acceptable alternative this year.

Insiders said that the corporation was coming under pressure from the European Commission to show that Jam did not represent illegal state aid.

The public broadcaster remains in the difficult position of resolving competing demands. Tessa Jowell, the Culture Secretary, approved the BBC’s digital education efforts in January 2003 – and reemphasised a duty to “promote education and learning” in the royal charter that was agreed last year.

Ed Vaizey, the Conservative broadcasting spokesman, said: “This is a mess of the Government’s own making. They told the BBC to set up Jam even though a number of education companies were already providing those services.”

So far, £75 million of the £150 million five-year budget has been spent, but only a tenth of the content has been made available. This will disappear when the suspension takes effect on March 20.

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