"So it's disappointing that Birmingham City Council has put forward a scheme which is not in the interests of local people and we believe, as a result, the European Commission has made a decision based on inaccurate and misleading information which could waste public money."

This announcement is going to come as unwelcome news to newly appointed culture secretary Maria Miller, who has been left with the rather difficult task of getting the UK's superfast broadband deployment back on track since Jeremy Hunt's departure.

BT and Virgin Media's move is the latest in a string of setbacks. Most notably, a Communications Committee questioned the government's success in increasing competition in the broadband marketplace, which has seen a number of ISPs pull out of the bidding process and to date has only seen BT win public funds.

that the UK has the lowest penetration of fibre-to-the-home (FTTH) in Europe, with only 0.05 percent of households connected.

The UK government has said that it hopes to have the best broadband network in Europe by 2015, and has committed a minimum of £830 million up until 2015 to support the rollout.