The cost of a television licence will rise by 3% a year in a below-inflation deal disappointing BBC management, the corporation reported last night.
The licence fee will increase to a maximum of £151 by 2012, falling short of the demands of the corporation, which could lead to cuts and job losses according to unions.
The settlement leaves the BBC with far less than it asked for to complete key projects including the digital switchover and relocation of several departments to Manchester.
Culture Secretary Tessa Jowell is expected to announce the deal in full today.
It will involve a 3% rise in the next two years, and a further 2% rise for the following three years. In April, the cost of a licence will rise from £131.50 to £135.
The BBC had hoped for an above-inflation settlement which could have cost households up to £180 by 2012. It had called for an increase in its borrowing to fund the Manchester move and costs associated with the digital switch.
Broadcasting union Bectu had already warned programmes will be affected and jobs hit by a below-inflation deal. BBC director-general, Mark Thompson, said before the official announcement the corporation would face difficult choices if the settlement was below the retail price index inflation figure of 3.9%. He warned in an e-mail to staff they "would face difficult choices".
He has already presided over budget cuts worth £355m a year and reduced staff by 4000, including 200 in Scotland. Scrapping a scheme to help for elderly and infirm people to pay for digital set-top boxes and the possible sale of the corporation's iconic Television Centre in London have been suggested as possible ways of making up the shortfall.
Mr Thompson is planning to reduce the number of sites the BBC occupies to free up additional funds, and the centre is believed to be no longer suitable for television production in the digital age. While negotiations took place it was also warned a lower than expected settlement could prevent the 2012 Olympics being screened in High Definition TV.
However, the government believes the cost of the digital switchover will be £600m and is ring-fencing that amount of the settlement.
Further negotiations over the corporation's borrowing ceiling will take place at a later date with the BBC reportedly hoping for the limit of £200m, set in 1992, to be doubled to help cover the Manchester project, but the Treasury is expected to agree to a much lower figure.
Around 1800 staff in children's programmes, sport and Radio Five Live are expected to move to Manchester in 2009.
Several thousand more staff, in BBC News, are due to move to a refurbished Broadcasting House in central London.
Mr Thompson, talking before the official announcement, described the expected figures as "a real disappointment".
A spokeswoman for the BBC said the corporation would not comment further until the official announcement.
The deal is understood to have been agreed by Ms Jowell and the the Chancellor at a meeting in December.
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