Three sport TV channels - BT Sport 1, BT Sport 2 and ESPN - will be available free of charge to BT broadband customers.
BT Sport will be free to all homes with a BT broadband connection.
It means that in Britain, for the first time in over 20 years, weekly live Premier League football games will be made free for anyone to watch on TV.
The three TV channels - BT Sport 1, BT Sport 2 and ESPN - will show 38 exclusively live Barclays Premier League matches, as opposed to the 23 offered by ESPN previously.
This includes 18 of the best quality 'top pick' matches, which, for the first time ever, have not all been snapped up by satellite giant Sky Sports.
Ian Livingston, BT chief executive, said: "UK sport fans have had a rough deal for too long. Many have been priced out of the market, but we will change this by giving away BT Sport for free with our broadband. Sport fans are the winners today!"
At the moment, only one in five UK homes takes a package of sport TV channels, possibly due to the high prices that have resulted from the absence of much competition.
BT Sport will be available through the telecoms giant's own TV service, a version of the YouView box that's also sold as a standalone product by retailers, as well as on Sky's satellite TV platform and also online via a new mobile app for smartphones and tablets.
The channels will also offer matches from the Bundesliga, The FA Cup, the Scottish Premier League and the UEFA Europa League when they launch at the start of August.