The Public Accounts Committee (PAC) says the way the bidding process has been handled means taxpayers are paying over the odds for the programme, which is also now running behind schedule.

But ministers have insisted the project is value for money and will be delivered ahead of similar schemes in many other countries.

And BT, the only company so far awarded any contracts to install fibre, has reacted angrily to accusations that it is exploiting a “quasi-monopoly position” in being the sole contractor working on the scheme.

BT has won 26 contracts so far and with the only other bidder, Fujitsu, withdrawing from the competition, BT is likely to get the remaining 18 still to be awarded.

The PAC says this means BT stands to benefit from £1.2 billion of public funds in total.

Committee chair Margaret Hodge told the Government: “If you had devised it differently, had bigger areas for the contracts so you could spread your costs more, allowed different technologies to be used and insisted on a 100% coverage, we would have found other people in the game and I bet we would have spent less of the taxpayers money.”

BT has defended its role, saying in a statement that it believed the PAC’s conclusions were “simply wrong and fails to take on board a point-by-point correction we sent to the committee several weeks ago”.

It added: “We have been transparent from the start and willing to invest when others have not.

“It is therefore mystifying that we are being criticised for accepting onerous terms in exchange for public subsidy – terms which drove others away.”