BT has launched the world's first phone service that allows a single handset to make calls using both mobile and fixed line networks, seamlessly switching between the two infrastructures.

BT Fusion provides customers with a Bluetooth hub/DSL router and a Motorola V560 handset, which are included in the sign up fee.

The handset communicates with the hub via Bluetooth, but BT said that it plans to upgrade this connection to Wi-Fi in the future and has incorporated the wireless technology into the hub in readiness.

When the handset is within 25 metres of the hub calls are routed through the DSL line and users are charged fixed line costs of 3p per minute for peak calls and 5.5p an hour for off-peak.

Away from the hub the handset piggybacks on Vodafone's mobile network, but BT claims that it can switch between the two systems seamlessly even in mid-call.

The service is only available to users of BT's own-brand broadband service, and mobile services are locked into Vodafone.

"Technically it can be used on any broadband service provider but only if we decide to make it available," said Ian Livingstone, chief executive at BT Retail.

"BT has spent a lot of money on this and you will have to be a BT customer to get the converged service. Over time we will offer it to other broadband customers."

There are two payment packages: Fusion 100 at £9.99 a month including 100 free minutes of calls; and Fusion 200 at £14.99 including 200 free minutes.

Broadband and fixed line bills of £17.99 per month and £10.50 per month respectively will be unchanged and charged in the usual way.

Calls are charged from the point at which they begin, no matter where the caller then roams during the call. But 0800 numbers, international calls, voicemail and directory inquiries will be charged at mobile rates regardless of from where they are made.

Up to six people can be authorised to use the hub and three people can make calls on the hub simultaneously.

BT declined to give exact pricing information on the cost of extra handsets, but suggested that "the cost of acquisition is not so great", and that more Fusion-capable phones would be available shortly.

"Cellular telephony revolutionised the world by taking communications mobile and now we are taking it further with the convergence of fixed and mobile," said Ed Zander, chairman of Motorola.

"That is why we will be bringing out a super slim RAZR handset that can use the Fusion service."

In the longer term BT wants to move the fixed line service to Wi-Fi and allow users to make calls using BT's network of 7,800 UK hotspots, once the network is upgraded, and to use Wi-Fi hubs in homes.

The telco said that the first Wi-Fi phones from manufacturers like Nokia will be available in a year's time, and that Wi-Fi Fusion services would follow shortly afterwards.

Once the Wi-Fi service is running BT will roll out a business offering, initially targeting small and medium sized enterprises. BT customers can sign up for services at BT Fusion.