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The country's three biggest broadband and home phone providers have agreed to slash their charges to customers who cancel their contracts early, following pressure from regulators.

BT, TalkTalk and Virgin Media have previously made subscribers pay full or nearly full charges for every month left on their contract in order to release them early.

From October (June 1 for TalkTalk) they will all levy significantly less than their previous monthly early termination charges - on some packages up to 85 per cent less.

For example, cancelling TalkTalk's Essential home phone and broadband package early previously cost £33.48 for each month left on the contract. Breaking the deal now costs £8 per month. There's a full breakdown of the new charges for each of the three firms here.

Ofcom has waged an 18-month campaign to cut cancellation charges. In December 2008 it published an opinion that providers were breaching their obligations under the Unfair Terms in Consumer Contract Regulations 1999.

The regulator said it now expects other home phone and broadband providers to follow suit by slashing their charges, and threatened enforcement action if they resist. ®

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