Mobile phone retailer Carphone Warehouse is expected to announce the launch of a free broadband service later this week.
A fast-growing number of firms now offer broadband connections
The company looks poised to provide free access for customers who sign up to its Talk Talk landline service.
A Carphone spokeswoman said that it could not comment on speculation but it did have plans to expand its broadband service in 2006.
The move could lead to a big shake-up among internet providers.
The news comes after satellite broadcaster BSkyB confirmed last week that it is to start offering broadband connections from this autumn.
BSkyB is also predicted to offer a number of low-cost deals, and it and Carphone Warehouse's move into the market is expected to start a price war.
The UK broadband sector is currently dominated by BT, AOL, Wanadoo and NTL.
Separately on Sunday, BT said it plans to offer more than 500 concerts and performances on the BT Vision broadband television service that it is due to launch later this year.