The BBC will close two radio stations, shut half its website and cut spending heavily on imported American programmes in an overhaul of services to be announced next month.

Mark Thompson, the Director-General, will admit that the corporation, which is funded by the £3.6 billion annual licence fee, has become too large and must shrink to give its commercial rivals room to operate.

In a wideranging strategic review, he will announce the closure of the digital radio stations 6 Music and Asian Network and introduce a cap on spending on broadcast rights for sports events of 8.5 per cent of the licence fee, or about £300 million.

He will also pledge to close BBC Switch and Blast!, leaving the lucrative teenage market to ITV and Channel 4. But BBC Three, which is aimed at 16 to 35-year-olds will not be touched.

The report is being considered by the corporation’s governing body, the BBC Trust, and is due to be made public next month.

It was drawn up by the corporation’s director of policy and strategy, John Tate, a former head of the Conservative policy unit, who co-wrote the party’s 2005 manifesto with David Cameron. It will be seen as an attempt to show a potential Tory government that the BBC understands the effect the deep advertising recession has had on commercial rivals and that it does not need outside intervention to get its house in order.

The proposals, which involve £600 million being redirected into higher-quality content, are based on the assumption that the licence fee will be frozen in 2013. All of the changes will be funded by closures and cutbacks in other services.

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