Free TV licences are to be restricted to over 75s who receive pension credits, the BBC has announced.
The government-funded scheme, which provides licences to the elderly, ends in June 2020 after which the responsibility will be passed on to the BBC.
Over 75s have been entitled to free, government-funded TV licences since 2000.
But there has been debate over the blanket policy, with analysis by the Institute for Fiscal Studies earlier this year showing that over the past 20 years, over-75s now enjoy faster income growth and earn more on average than working-age families and households under the age of 35.
Yet the move will leave some 3.7 million pensioners now having to pay the fee, which currently stands at £154.40, or £52 for a black and white TV licence.
BBC Chairman David Clementi said: “Linking a free licence for over 75s to Pension Credit was the leading reform option. It protects the poorest over 75s, while protecting the services that they, and all audiences, love.
“It is the fairest and best outcome. It is one we can implement and endorse. This is an outcome that is the fairest possible in difficult circumstances.”
The move could benefit around 1.5 million eligible households and will cost the broadcaster around £250m by 2021/22.
Costs will be covered using funds diverted from other BBC programmes and services.
But the broadcaster says the move prevents it from making “unprecedented closures” of services, which would have been required had it adopted the Government’s scheme directly.
Labour leader Jeremy Corbyn tweeted: “Pensioners are being failed by the Conservatives. Their 2017 manifesto promised to keep TV licences free for the over-75s - they must not go back on their word now.”
Tom Watson, shadow culture secretary and deputy Labour leader, said: “In the same week that Boris Johnson has championed tax cuts for the richest 8%, his Government has delivered yet another ruthless welfare cut to some of the most vulnerable people in our society.
“You cannot means test for social isolation. You cannot means test for loneliness.
“Millions of elderly and isolated people will lose because of this announcement – Labour will fight it with everything we’ve got.”
Michelle Stanistreet, NUJ general secretary, said the move leaves the BBC in the “unpalatable position” of choosing which pensioners should receive a free licence, in addition to taking on the “massive” cost.
She said: “The NUJ and many other groups argued that this consultation was a window of opportunity for the BBC to take a step back and refuse to facilitate a divisive policy that will wreak significant financial harm on the corporation.”
She added: “It is time for a radically different approach to running and preserving our public service broadcaster. The only answer is for the government to take back this benefit.”
Women living alone are the most likely to be hurt by changes to free TV licences for over-75s.
Media analyst Claire Enders told industry conference Voice Of The Listener & Viewer in May: “One third of people who could get pension credit do not get it and we think this would fall particularly hard on women who are living alone.
“They would be the people who are the least likely because they are the least likely to apply for pension credit.”
It is time for a radically different approach to running and preserving our public service broadcaster
BBC Director-General Tony Hall said: “Whilst we know that pensioner incomes have improved since 2000, we also know that for some the TV Licence is a lot of money.
“It would not be right simply to abolish all free licences. Equally it would not be right to maintain it in perpetuity given the very profound impact that would have on many BBC services.”
He added: “This decision is fairest for the poorest pensioners. It protects those most in need. And importantly, it is not the BBC making that judgement about poverty. It is the Government who sets and controls that measure.”
It comes after a report released at the end of last year laid out four main options for the broadcaster – scrapping the concession, providing a 50% discount, raising the age threshold to 77 or 80 or means-testing in line with pension top-ups.