PLANS by the BBC to launch local online video news services were rejected today.

The BBC Trust, which is the corporation's governing body, said the £68m proposals should not go ahead. It concluded they would not improve services for the public enough to justify either the investment of licence fee funds or the negative impact on commercial media.

BBC bosses wanted to spend £68m by 2013 on 65 local websites with video content but met with fierce opposition.

BBC Trust chairman Sir Michael Lyons said: "It is clear from the evidence that although licence fee payers want better regional and local services from the BBC, this proposal is unlikely to achieve what they want.

"We also recognise the negative impact that the local video proposition could have on commercial media services which are valued by the public and are already under pressure."

The proposals have been strongly criticised by commercal broadcasters and newspaper publishers, who claim they would damage their businesses.

Carolyn McCall, chief executive of the Guardian Media Group, which includes the MEN, described them as 'a danger to plurality, diversity and democracy'.

Local newspaper owners also questioned why the licence fee-funded BBC should be seeking to duplicate rival existing commerical operations.

Sir Michael added: "We believe the BBC's priority should be improving the quality of existing services. The public wants better quality regional television news programmes and more programmes of all kinds produced in and reflecting their areas."

Although revised plans could be submitted, he warned: "We would expect BBC management to consider carefully the conclusions of this public value test before returning to us with new proposals.

"Our decision today to refuse permission for local video means that local newspapers and other commercial media can invest in their online services in the knowledge that the BBC does not intend to make this new intervention in the market."

The BBC Trust has ordered that the £68m of funds earmarked for the plans be removed from the Nations and Regions budget and returned to central funds. Its provisional decision is now open to public consultation, with a final decision on the issue to be published by February.

In a separate report, media regulator Ofcom today concluded that the BBC management's plans would damage commercial rivals. They said the proposals would have 'a significant negative market impact on commercial providers', with newspaper publishers among those most affected.

"We expect the impacts on these services, as they are currently provided, to be no more than about four per cent of annual revenues," said Ofcom. "However, our main concerns are about the effect of the BBC's proposals on future commercial innovation in online local news, sports and weather services."