New research suggests that Skype is dominating the UK VoIP market with 48 per cent of all VoIP calls made last year using the software.

A poll of more than 2,000 people by telecoms analysts Continental Research found that nearly half of those making VoIP calls were Skype users. MSN was the second most popular service at 20 per cent.

Value for money was cited as the key reason for making calls over the internet, but the sound quality of VoIP calls is causing the most dissatisfaction.

"The high satisfaction with such a key measure as value for money means that VoIP use is likely to spread through word of mouth as customers advocate the service to friends, relatives and colleagues," said James Myring, associate director at Continental Research.

"We expect technical issues such as sound quality to improve over time as the service becomes more established."

Over half of those questioned indicated that they will increase their use of the technology over the next 12 months, and only one per cent said that they would cut back.

The analyst estimated that 1.6 million people made VoIP calls in the UK last year, and that another 1.9 million users will be added this year based on the evidence of those indicating that they would try the service.