Culture secretary Nadine Dorries has indicated that the licence fee will be scrapped after 2027 in what would be the biggest shakeup for the BBC in its 100-year history.
The corporation currently receives £3.75bn a year in revenue from the funding method, which requires every household in the UK to pay an annual fee of £159 in order to watch live TV.
Debate over the fee has been rife for decades but Dorries, who has been in her position since last September, has made a bold declaration that the current funding model will be scrapped when the BBC charter comes up for renewal in 2027.
Taking to Twitter today, she wrote: "This licence fee announcement will be the last. The days of the elderly being threatened with prison sentences and bailiffs knocking on doors, are over.
"Time now to discuss and debate new ways of funding, supporting and selling great British content."
The news comes as the BBC celebrates its centenary year and follows years of enforced budget cuts due to government reluctance to increase the licence fee.
The BBC has argued that the cost of the fee should be raised in line with inflation - currently at 5.2% - which would see it go up to £167 this year and £176 in 2023, but Dorries has decided to freeze it at the current level for the next two years to aid with the cost of living.
The corporation's current charter expires on December 31, 2027, meaning that a new funding model - possibly including subscriptions or a commercialisation of some channels - could come in to place in 2028.
The next general election is currently scheduled to take place in May 2024 and the future of the BBC could be one of the big talking points of that campaign.
The government is also pondering a radical overhaul of Channel 4, which could see the broadcaster privatised in the next two years.