Former BBC director-general Lord Birt has hit out at the "deeply shocking" announcement that the corporation will fund TV licences for over-75s.
Current director-general Lord Hall has described the agreement as the "right deal" in "difficult circumstances".
Yesterday, Culture Secretary John Whittingdale told the House of Commons that the corporation has agreed to fully fund free TV licences for over-75s from 2020/21.
It is part of a deal which would see the BBC also benefit from a reduction in the amount of licence fee income used to pay for broadband roll-out, from £150m to nothing in 2020/2021. There will also be a return to inflation-based licence fee increases and a change in the law to ensure the licence fee covers those who only access catch-up TV.
Last week the BBC said it expected licence fee income to drop by £150m in 2016/2017 and announced that it was cutting 1,000 jobs to save £50m a year. The cost of free TV licences for those over 75 has been estimated at £650m a year.
Press Gazette has asked both the BBC and the Government what the predicted net reduction in BBC income will be. Neither was able to supply that information.
Whittingdale also announced legislation would be brought forward in the next year to ''modernise the licence fee'' to cover public service broadcast catch-up TV – an apparent nod towards charging people who use the iPlayer.
The BBC licence fee of £145.50 is also expected to rise in line with inflation.
Lord Birt (pictured, Reuters), who was in charge of the BBC from 1992 to 2000, led a chorus of criticism from peers for the plan, which was set out yesterday by Culture Secretary John Whittingdale.
"This is a deeply shocking announcement," Lord Birt said in the House of Lords
"The BBC has been in existence for almost a century. It is unique in the world for a number of reasons, one of which is that very early on its history Winston Churchill tried to take it over at the time of the General Strike.
"The then director general, John Reith, resisted it and essentially established its independence in a way no other public service broadcaster around the world has managed.
"That independence was breached in the last parliament by the deal when overnight, without any debate of any kind whatsoever, essentially 16 per cent was taken outside the BBC's budget and the Government, not the BBC, decided to use the licence fee to fund the World Service, S4C and, amazingly, BBC Monitoring, which is a very specialist service not much to do with broadcasting.
"This has happened again, taking a huge slice out of the BBC's budget. Again it happened with no public discussion of any kind.
"This Government and the last Government have essentially set a very dangerous precedent."
Composer Lord Berkeley of Knighton, an independent crossbench peer who presents the Radio Three programme Private Passions, said "very considerable cuts" had already been made and his pay had been slashed by two-thirds.
"Does this Government feel happy about seeing the squandering of a national asset through a thousand slashes?" he demanded.
"Cuts have been made and I am prepared to reveal that I was asked to take a third of the fee I used to get for my programme on Radio Three and I did so happily in the interests of cutting costs."
Labour peer and broadcaster Baroness Bakewell described the move as an "attack on people who are old, alone and living unhappy lives".
"They depend on broadcasting more than any other segment of the community and that has been provided by the BBC for decades to the satisfaction of the older part of the population which we know is increasing," she said.
"This is a Government benefit that is being cut and dumped on the BBC, because the BBC is being targeted for political reasons by the Government."
Tory former Cabinet minister Lord Fowler said it was a "surprising statement".
"A massive decision has been taken prior to the charter review in that an indiscriminate cut of half a billion pounds is being made in the BBC budget without any thought being given to what effect this will have on programming and news coverage," he said.
"Surely if free television licences for all those over 75 is government policy then it should be funded by the Government and not just passed on to the BBC?"
Government spokesman the Earl of Courtown told peers: "All these matters will be up for discussion over charter renewal."