More than half of UK households have broadband and effective competition is driving up speeds, according to telecoms watchdog Ofcom.

The average broadband speed at the end of last year was more than twice as fast as a year earlier. And by June 2007, the national average had risen again - up to 4.6 Mbit/s from 1.6 Mbit/s at the end of 2006, says the telecoms market report published by the regulator today.

Connection speeds have been fuelled by competition resulting from local loop unbundling – the regulatory process which has allowed multiple broadband operators to use BT exchanges.

Bundled communications deals are also gaining popularity with consumers. Packages offering a mix of broadband, digital TV, mobile and landline phone access have now been adopted by 40 per cent of UK households, up by a third over the past year.

Growing broadband access is fuelling a rise in domestic use of Voice over IP (VoIP). Around one in five people surveyed by Ofcom make phone calls via their computer, compared with 16 per cent last year.

Convergence is also narrowing the gap between TV and online marketing. Expenditure on internet advertising reached £2bn last year, with a spend equivalent to 44 per cent of the TV sector. Revenue from TV advertising fell 2.2 per cent to £3.5bn.