The review, carried out by the Chairman of the Press Standards Board of Finance, Philip Graf, looked into whether BBC Online, originally approved in 1998, was meeting the terms under which it had been set up and what impact it had on the internet market.
Such a review is part of the normal process of assessing a new BBC service. The BBC has until the end of October to respond.
According to Graf, "There is clearly great public affection and appreciation of BBC Online, so I hope that, in their interest, my conclusions provide constructive input to both the BBC and to the DCMS's Charter Review."
In general terms, the review found that BBC Online delivers high quality material in an effective and user-friendly manner. There are, however, a number of changes that could be made to improve the experience for users, deliver efficiency, and ensure that the site effectively reflects BBC Online's priorities.
Philip Graf also noted that some sites - such as fantasy football, games sites and "what's on" listings - were not sufficiently distinctive from commercial alternatives, or were inadequately associated with public service purposes to be justified by the current remit.
Recommendations
These include:
The review also considered the potential market impact of BBC Online. It could neither prove nor disprove the theory that BBC Online had an adverse impact on the UK internet market, but did find indications of an adverse impact on competition, particularly in deterring investment by commercial operators that would have led to new forms of competition.
The review also found that the BBC's role in the development and promotion of new technology needs to be more clearly defined and expressed. It therefore recommends that the BBC should, as a top priority, explore how it can work more effectively with the rest of the on-line community.
The Culture Secretary Tessa Jowell welcomed the report and called upon the BBC Governors to "respond on how they plan to redefine the purposes and aims of BBC Online, so that they are more closely aligned to the public service remit of the BBC."
"I will then consider what further action needs to be taken, whether as part of, or externally to, the on-going Charter Review," she added.
The BBC response
Speaking at a press conference yesterday, Ashley Highfield, BBC Director of New Media & Technology, welcomed the recommendations.
He stated his ambition to work more closely with regional newspapers to deliver a more collaborative listings service; his desire to increase spend with external companies and to create a clearer external links policy. The BBC would also be redrafting the remit for bbc.co.uk, he said.
There had already been changes to some of the BBC web sites, said Highfield, and more would be made, including the closure of the Fantasy Football, the central What's On events listings, the Surfing portal, the Games portal, and Pure Soap web sites.