Several media and software companies are demanding a judicial review of the BBC's plans to spend £150m of licence money on expanding its online education service over the next five years.
The BBC faces a battle with a coalition of 18 software firms, which say their industry will be "decimated" if the BBC plans are approved by the government. They believe the plans go beyond the corporation's public service remit.
An industry body representing media firms such as Pearson, Granada and Reed Elsevier is to petition the culture secretary, Tessa Jowell, amid claims they could lose millions of pounds in revenues.
Ms Jowell yesterday invited views on the BBC's application in which it proposes introducing a wide range of interactive online learning materials in support of the school curriculum. In line with the BBC charter the plans need the secretary of state's approval.
"Our industry could be decimated," said Dominic Savage, co-chair of the Digital Learning Alliance, a trade body for companies involved in online learning. "We have deep concerns about our members' ability to compete with a similar service that was offered for free. There is a serious risk of substantial job losses."
The software companies considering legal action are demanding the public disclosure of an independent report from investment bank NM Rothschild and commissioned by the Department for Education to examine the commercial impact of the BBC's plans.
"We believe the report shows that the BBC's actions would have a very negative impact on us and yet it has never been made public and appears to have been buried," said Phil Hemmings, spokesman for schools software supplier RM.
The commercial operators have been pressing the Department for Education to ensure a vibrant marketplace, if the BBC's proposals are approved, by making extra cash available for schools to buy more computer-related products. They say the government's offer to make £50m in "electronic learning credits" available from the start of the next academic year in September is inadequate.
"Our research shows that if the government wants to safeguard choice and diversity in educational resources we need schools to be given £800m extra," said Mr Savage.
In its submission to the culture department, the BBC argues that its proposed free service "is the latest development of the high quality educational resources which the BBC has provided since the 1920s".
It goes on to promise students access to "a broad range of learning resources". The programmes and content would be "distinctive", of "high quality" and in strong demand from teachers and pupils.
The BBC has also commissioned PricewaterhouseCoopers to produce an independent report into the potential market impact of its plans but has not yet made the results public.
Guardian Media Group, publisher of The Guardian, also has interests in the online education market through the website learn.co.uk.
Ms Jowell has set a deadline for views of July 5.
The following correction was printed in the Guardian's Corrections and Clarifications column, Saturday May 25 2002
We incorrectly stated that an independent report by Pricewaterhouse-Coopers into the potential market impact of the BBC's plans had not been made public. In fact it may be read on the website of the Department of Culture.