A shrunken BBC will lose 2,000 jobs, show more repeats on BBC2 and cut spending on sport and entertainment programmes as the broadcaster sets out plans to show that it could contend with a licence fee freeze that is due to last until at least 2017.
BBC News will bear the brunt of the job losses, with 800 positions lost, largely from merging the broadcaster's publicly funded news operation with the World Service, and not transmitting programmes such as Newsnight and Radio 4's PM live from party conferences.
Meanwhile, BBC3 will be moved to the corporation's northern base in Salford, which will become home to at least another 1,000 staff, taking its total workforce to 3,300, while the BBC prepares to leave its west London headquarters.
There will also be wide-ranging cuts to the BBC's radio output, with the exception of Radio 4.
Mark Thompson, the BBC's director general, said the review – called "delivering quality first" – would lead to a smaller and radically reshaped BBC. The changes were designed to save £670m a year by 2017. But the corporation had come to the end of the road, he said, if more cuts were forced on it in the future.
"We can't do this again. Another real-terms cut in the licence fee will inevitably lead to a loss of services or diminution in quality or both," he said. "If [we are forced] to go for more real-terms cuts the amount of road left for productivity savings is rapidly running out."
A year ago, intense behind-the-scenes negotiations between Thompson and the culture secretary, Jeremy Hunt, left the BBC with its licence fee frozen at £145.50. The corporation also agreed to take on extra responsibilities from the government, including the taxpayer-funded World Service.
Despite the freeze, the corporation has been able to avoid axing any of its digital channels or services, and its chairman, Lord Patten, argued that its scope was not significantly diminished: "The BBC is far from perfect but it is a great institution and, at its best, a great broadcaster. We have a tough and challenging new licence fee settlement, but it should still be possible to run an outstanding broadcaster on £3.5bn a year."
Unions voiced concern at the impact of the changes. Gerry Morrissey, general secretary of technicians' trade union BECTU, said: "When Mark Thompson did the licence fee deal he said the BBC could not continue to do everything. But this is salami slicing. I believe the BBC should have been brave and should have said we are not going to damage quality. This strategy is destroying quality, jobs and the BBC."
BBC News will scrap 800 jobs, about 15% of its 5,000 total, to save £69m from its annual budget of £430m. BBC1's Sunday lunchtime strand, the Politics Show, will be axed and replaced by a weekend version of Daily Politics. The corporation also wants to end the annual embarrassment of sending more than 100 staff to the party conferences by forcing the likes of Jeremy Paxman and Eddie Mair to broadcast from London.
Michelle Stanistreet, general secretary of the National Union of Journalists, said: "This is a watershed moment in BBC history. We are stunned that BBC News, BBC Radio and quality journalism have received a disproportionate hit today. The cuts risk irreparable damage to the BBC and will inevitably compromise quality journalism and programming."
BBC2's existing daytime schedule will be scrapped, replaced by international news and current affairs at lunchtime and repeats in the afternoon. BBC3 and BBC4 will be "refocused" to play a supporting role to BBC1 and BBC2 respectively. There will also be fewer entertainment programmes and overseas acquisitions.
The broadcaster also proposed that children's programmes such as Blue Peter would be dropped from BBC1, airing exclusively on its two dedicated digital channels, CBBC and CBeebies, some time after the whole country has switched over to digital television in 2012.
On radio, there will be greater sharing of news bulletins across networks, with Radio 5 Live, which has recently expanded its entertainment programmes, refocused on news and sport. Radio 3 faces cuts to lunchtime concerts and live music, and the BBC's orchestras and singers will be "reviewed", but the Proms gets an extra £1m. Local radio will be hit, with a focus on peak-time shows and more shared programmes across neighbouring stations.