TELECOMS group BT last night announced plans to launch the first phone service that combines mobile and fixed-line networks with a single handset.

The group has teamed up with mobile operator Vodafone to launch Project Bluephone, which will enable customers to switch between mobile and landline services while using the same hand-set.

After an access point is installed at home or in the office, mobile phone users will be able to take advantage of cheaper calls and better reception when their mobile automatically tunes into the fixed-line network.

When they move out of range of the fixed-line service, their handsets will switch to the Vodafone mobile network - according to BT, users will experience a seamless transition between the two services.

Customers will also be able to use the high-speed broadband link on their mobile phones by again tuning into the landline service.

BT, which will offer the service to its broadband customers later this year, hopes to generate about £1bn of annual mobility and convergence revenues in the next five years.

The group believes it can boost profits by connecting mobile phone users back to the landline network with the service.

Vodafone, meanwhile, will benefit under the scheme from the landline customers who tune into their mobile phone network.

The group said the project had undergone successful trials with 50 users during the past two months and said the technology was proven.

Customers will have to have their mobile phones upgraded to receive the signals that allow the handset to tune into the landline.

Charges for installing the access point and for subscribing to the new service will be revealed later in the year.