Channel 4 on Friday blamed the economic crisis as it announced it was cancelling plans to become a digital radio broadcaster and pulling out of a consortium in which it was the majority shareholder.

But remaining members of 4 Digital Group, which has been trying to launch a cluster of stations known as a multiplex, insisted Channel 4's dramatic move did not mean their enterprise would fold.

Channel 4 said it would save £10m ($17m) in 2009 as a result of the policy reversal. Andy Duncan, the broadcaster's chief executive, said: "Frustratingly, our plans have been overtaken by a drastic recent downturn in our revenues and we will have to forgo this future profit stream. We can no longer afford the short-term investment necessary given that we are having to cut so deeply across all parts of the organisation."

People familiar with internal discussions said the broadcaster, which two weeks ago announced job cuts to 15 per cent of its workforce as it attempted to reduce £50m off its annual operating costs, could only see the economic situation getting worse.

Ofcom, the broadcasting regulator, put out a statement saying that it "continues to believe that DAB [Digital Audio Broadcasting] offers listeners real benefits".

The BBC, which provides the backbone for the medium with nine channels, has committed itself to the future of DAB and the government has also backed the platform. There are almost 8m DAB sets in the country.