Ofcom may not exercise its right to auction the existing 3G licences when they expire, allowing the current holders to continue until 2021 instead. 

The decision could cost the government billions of pounds, as the initial auction for licences in 2000 raised £22.5bn.

The move comes as the telecoms regulator plans to sell off further 3G licences in what it calls the "expansion band" later this year.

These additional 3G licences would cover an indefinite period, and existing 3G operators have argued that it would be unfair not to apply the same conditions to their licences.

However, according to The Times, government sources expected the licences to be put up for auction when they expired, in a similar system to the 2000 procedure.

A decision to extend the licences indefinitely could also bring legal action from companies which may have bid more at the time if that had been one of the conditions.

Ofcom claims that no official decision has yet been made.

If the licences are continued indefinitely, the next big spectrum auction could be when the analogue TV signal is finally switched off in 2012.