Later this month, the Government is expected to announce a new, all-singing, all-dancing digital curriculum. If it succeeds, teaching could be transformed by a new generation of learning aids.

Are your pupils puzzled by Pythagoras? No problem: you could zap to a video where a film stuntman explains the importance of getting the angles right in a dare-devil motorbike jump. Want to demonstrate the reactions of a dangerous chemical? Bring a video clip up on screen.

In five years, every teacher in Britain should be able to select and download high-quality teaching aids and use them on a computer, television screen or interactive whiteboard. Ministers promise a rich, interactive mix of video, sound, text and animation.

If all this sounds tempting, it is - and not just for teachers. By 2006, up to pound;500 million in public money could be ploughed into developing the new resources which ministers hope will spawn a billion-pound e-learning industry and give British companies a hefty slice of a potentially lucrative global market.

With such big sums available - and the promise of worldwide sales - leading media companies and educational publishers such as the BBC, Granada and Pearson are jockeying to get a piece of the action.

This tussle has turned nasty in recent months. The Government was threatened with legal action by companies who believed they were not getting a fair chance to compete. Battle lines were drawn as upholders of the free market, who believe that the innovative, flexible resources can only be achieved through competition, confronted the public-service BBC, which argued that the stakes for the nation were too high to leave development of new learning aids to chance and market forces.

The BBC has been anxious to shore up its raison d’etre as a public service with a renewed commitment to education. Last autumn, it announced plans for a comprehensive digital curriculum service. Over the next few years, it said, it would roll out materials for all national curriculum subjects at every level. To pay for this it set aside a cool pound;139m, to be met by licence-payers.

The size of this investment dismayed many educational publishers, who feared they would be frozen out of the new market.

Their suspicion had already been aroused by a government competition inviting companies to tender for a pound;42m contract to develop digital resources for six GCSE subjects, which appeared to discourage bids from non-TV companies.

In April, the Department for Education awarded the contract jointly to the two front-runners, the BBC and Granada. This prompted a furious response from the education suppliers industry which claimed that the terms of the original tender had been ignored.

The industry was angry that these two TV companies had won the contract when most services will be delivered online, not broadcast, a claim disputed by the BBC and Granada.

The suppliers’ protest seems to have won a victory of sorts: the Department of Culture, Media and Sport has still not granted the BBC the permission it needs to go ahead.

“We have suggested the threat of legal action to the Department for Education and Skills,” says a laconic Dominic Savage, chairman of the British Educational Suppliers’ Association. “They responded very quickly and agreed that any contract would need to be within the terms of the tender.”

But this is a mere spat compared with the wider argument over the future of digital resources. The BBC in particular has bigger fish to fry and its private competitors fear they will take a battering.

The big fish is the online curriculum. In April, the Department for Education published its own vision of this in a consultation document, Curriculum Online, and has been consulting on a range of options for developing and regulating the new market. For ministers, this is no small commitment.

Since 1998, when the National Grid for Learning was established, almost pound;1 billion has been spent on developing computer hardware in schools and training teachers to make the most of it. A further pound;710m is promised over the next two years.

Having installed the hardware and trained the teachers the remaining step is to provide the software. The DFES is, in effect, playing the role of midwife in bringing this new digital software into the education world. The choice seemed to be between encouraging a competitive market and allowing the BBC to dominate. The advantage of the latter option was that the BBC services would be consistent and comprehensive and - in keeping with its public-service remit - free.

The free market has had one heavyweight champion, RM, one of the biggest suppliers of software systems and services to schools. “Our position is that teachers and pupils are best served where schools have access to a wide range of digital learning resources,” says Phil Hemmings, the company’s corporate affairs director. “It is important, we would argue, because competitive markets are the best way of giving choice. If the BBC gets permission to spend all this licence money they would become such a large player it would distort the market and damage competition. That mustn’t be allowed to happen.”

Unsurprisingly, the BBC does not share his view. In its response to the Government, it argued that the online curriculum was too important to be left to the market.

“The service must cover all core subjects and levels, not just the most popular, and the resources must be easy to access and use, to the benefit of teachers and pupils,” it says.

Other influential voices have been lobbying hard for the BBC. Lord Puttnam, the film-maker and key government adviser, believes the BBC’s involvement is essential to develop resources quickly and to put Britain ahead of the world in e-learning.

So what has finally emerged? After what seemed like a breakdown in relations between the warring parties and DFES civil servants in the spring, a flurry of meetings involving all the key players seems to have produced a deal, likely to be formally announced by Education Secretary Estelle Morris later this month.

The big winners in the deal look to be the BBC and Granada who will build on their partnership. Most educational publishers are now resigned to allowing them supremacy because the deal gives the publishers a foothold in the new market. Outright opponents of giving the BBC a major role, such as RM, will be disappointed.

The deal proposes schools be given an annual sum in the form of “electronic learning credits” which they can use to buy the digital resources of their choice. The Government will fund this with a substantial investment - according to industry sources as much as pound;400m over five years - paid direct to schools through the DFES’s standards fund.

This is designed to encourage companies - as well as enterprising schools and teachers - to develop a wide range of materials, which will earn revenue each time they are accessed.

But the BBC will be happy. It is set to be given permission to go ahead with a watered-down version of its pound;139m curriculum,which will be free to schools. It will set the standard for its competitors, but also further stimulate the market by contracting out half its output to external producers.

The Government will play a central role, acting as gatekeeper and digital librarian to allow teachers to access all the new resources - from the BBC and private firms alike - through a single “portal”.

So teachers will have a choice of buying resources using digital credits or using free BBC ones, all accessed via a single system.

Ministers are believed to be considering a proposal to build this central portal through a public-private partnership, involving key players in the industry. It will be based with the National Grid for Learning which already claims to run the largest educational portal in Europe.

Few teachers will have given much thought to the new materials that will soon be at their disposal. But both the Secondary Heads Association - which has been working closely with the BBC - and subject associations are keen to use them if they are good enough.

John Lawrence, the Association of Science Education’s chief executive, says: “What teachers will want to do is to be able to take these resources and re-edit them for their own purposes. The resources will need to be flexible.”

Ms Morris has the proposals on her desk and will be relieved that, after all the wrangling, there is a consensus on how the new system can work.

So far, so good. Now all she has to do is convince Gordon Brown to cough up the money needed to kickstart the process. But, faced with the BBC, Granada and other blue-chip companies clamouring for a headstart in the burgeoning global business of e-learning, dare the Chancellor refuse?

Next week: what GCSE pupils think of digital TV courses

WHAT’S ON OFFER?

An electronic library offering schools and home learners multi-media resources to support teaching, learning and homework.

Who will provide the resources?

The BBC will play a leading role, promising a comprehensive service to support every national curriculum subject at all levels. Others such as Granada, RM, Pearson, Reed, Nelson Thornes and 4Learning, Channel 4‘s educational arm, will also feature.

How can I access them?

Through an online portal, probably linked to the National Grid for Learning, you can browse through the library. Once you find what you want, download it.

What will it cost?

The BBC materials, in keeping with its public service remit, will cost nothing. In addition, state schools will be given an annual grant, lasting up to five years, to allow them to buy alternative resources from commercial providers. These will be paid for using electronic learning credits, allowing companies to earn revenue from the new media.

What equipment will I need?

A broadband connection. Most schools are already wired up to the Internet, but unfortunately this uses only a narrowband connection. If the Government’s online curriculum plans are to happen money will have to be found to enable schools to convert to broadband. Alternatively, you may be able to access material at home. Half of homes are expected to have digital TV by 2005.