The government has unveiled its Next Generation Fund, which will help bring 2Mbps internet access to areas of the UK that are currently without broadband access.
The £1bn fund, which was unveiled by Lord Mandelson this week, will be raised by the 'Broadband tax' announced last year that will see homes with a telephone line having to fork out an extra £6 per year.
The fund will help fulfil the proposals set-out in the Digital Britain report that aim to bring 2Mbps broadband speeds to the whole of the UK by 2012.
The government said the investment is essential "if the UK is to remain globally competitive as estimates suggest that private investment will only reach up to 70 percent of the population by 2017".
"This investment is about bringing the future of broadband to areas of the country that would otherwise miss out," said Mandelson.
"Already the market is delivering superfast internet speeds of 50Mbps to half the country but we cannot be certain that it will reach the communities that are not currently served, which is why we are putting in an extra £1billion to support the market".
Mandelson said upgrading the aging copper networks to new fibre cables "will bring jobs, boost business potential and grow our digital economy".
The government is now holding a consultation period to decide on the most effective way to deploy the investment.