The move will reduce international call charges substantially and is expected to boom IT-enabled services. It will also allow the mobile-to-mobile phone users to receive overseas calls.

A cabinet meeting presided over by Prime Minister Khaleda Zia yesterday however set some conditions like paying licence fees and security deposit for obtaining licence for the internet-based technology.

The operators will also have to generate and terminate calls through the Bangladesh Telegraph and Telephone Board (BTTB) international gateway.

Earlier, the Infrastructure Investment Facilitation Centre (IIFC) recommended licence fee ranging between Tk 30 lakh and Tk 40 lakh. But sources said the cabinet yesterday has asked Bangladesh Telecommunication Regulatory Commission (BTRC) to set a higher licence fee to discourage shady firms.

The BTRC will award licences and oversee the operation of the VoIP operators.

The delayed approval of the VoIP has already cost the country crores in revenue as illegal operators having close links with the government are still doing a brisk business in call termination. The proposal to legalise the VoIP had been pending for a couple of years.

Akhtaruzzaman Manju, president of the Internet Service Providers Association (ISPA), hailed the cabinet decision.

He termed it a milestone in the history of the country's ICT sector and said it will pave the way for fostering ICT growth.

He said local firms will be able to set up call centres, medical transcription service and many other IT-enabled services following the decision.

Manju said the regulatory authorities should limit the number of phone lines the internet telephony firms would use.