One2One launched legal action against the Government last week, accusing it of acting unfairly in the third generation (3G) mobile phone licence auction.

One2One said it will sue the Department of Trade and Industry (DTI) over its decision to allow Vodafone AirTouch to delay payment for the licence it secured by up to 180 days.

However, the DTI said it has not received any formal notification of the action and that it does not believe it is in anyone's interest to challenge the rules of the auction after the event.

Vodafone and its UK subsidiary Orange were able to bid separately in the auction and have been given 60 days to de-merge.

The 60-day delay of payments, which could be extended by up to 180 days, has angered One2One. The operator believes that it could give Vodafone an unfair saving of up to £360m in interest.

Robin Saphra, public policy director at One2One, said: "The situation is clearly unfair and would allow Vodafone a distinct financial advantage.

We are disappointed that we have had to take legal steps to ensure a fair and level playing field among UMTS (universal mobile telecommunications system) licence winners."