Culture Secretary Nadine Dorries outraged presenters when she said that “state-run TV has had its day” and that ministers would explore alternative models to fund the corporation, such as subscription or mutual ownership.
Ms Dorries said the licence fee would remain at £159 a year until April 2024, a real-term cut to the BBC’s funding.
She said she expected the rate to rise with inflation after that date until 2028, when she wants to scrap the fee altogether.
Roger Mosey, a former executive at the corporation, argued against a subscription model, tweeting: “I still haven’t heard a convincing argument about how that would work for network and local radio – or on Freeview television.”
The proposal is regarded as part of Downing Street’s campaign to win back public support for Boris Johnson after the “partygate” scandal caused his popularity to plummet.
Critics say the list of proposals, dubbed “Operation Red Meat”, is a distraction tactic from the crisis engulfing the prime minister's office.
The BBC believes that the funding settlement will have profound implications for the corporation.
There are also concerns that senior Conservative MPs appear to be linking the move to the BBC’s political coverage.
Match of the Day host Gary Lineker called for the BBC to be protected.
“The BBC is revered, respected and envied around the world,” he said. “It should be the most treasured of national treasures. Something true patriots of our country should be proud of. It should never be a voice for those in government, whoever is in power.”
BBC Breakfast presenter Dan Walker also jumped to his employer’s defence, saying the world of media would be “much poorer without” the BBC.
“I am well aware that the BBC makes mistakes and needs to change, but the media landscape would be much poorer without it,” Mr Walker wrote on Twitter. “Those 3 letters are trusted and respected around the world.”
But Baroness Hoey, a former Labour MP, hit back at Mr Walker’s comments, saying the BBC is “no longer” respected as a source of information.
She claimed presenters are “paid far too much” and said the corporation “hassles pensioners” who have not paid their licence fee.
“And that is apart from the bias it constantly shows to politicians who don’t fit the BBC’s cosy metropolitan liberal view of the world,” she said.
Education Secretary Nadhim Zahawi said negotiations between Ms Dorries and the broadcaster were “ongoing”.
He said the BBC “is something we need to make sure we continue to support and protect” and that Ms Dorries would be making a statement on the outcome in due course.
“I can tell you, because (BBC director-general) Tim Davie came to see me when I got the job of Secretary of State for Education, the work we do, that the BBC does on education, is incredibly valuable,” Mr Zahawi told the Today programme on BBC Radio 4.
“But we also have to recognise that, actually, the way people consume media today is very different to the way they did five years ago, and part of that is a proper grown-up conversation as to how the BBC is funded beyond this settlement.”
The government’s plan was branded “cultural vandalism” by Labour's Lucy Powell, the shadow culture secretary.
She claimed ministers were using the proposed policy as a ploy to divert attention away from Mr Johnson’s “disastrous leadership”.
“Let’s not pretend that this is anything other than it is, which is a pretty obvious dead cat strategy from the government to distract from the totally disastrous leadership context that the prime minister is facing at the moment,” she told Today.
The prime minister and public are awaiting the findings of civil servant Sue Gray’s report into party allegations in Downing Street during the pandemic.
There were reports that the inquiry could be concluded this week, but it is now suggested that an announcement of its findings will be pushed back until next week.
A delay would give the prime minister and his inner circle more time to announce policies aimed at winning back public support.
Mr Johnson will be able to read the report before it is published.
He has pledged to make a statement in the House of Commons after the findings are released.