Last week Culture Secretary Oliver Dowden scrapped plans to decriminalise the licence fee. He warned the alternatives risked higher fines for those who evaded the payment.
Today the House of Lords placed fresh pressure on the Government over the issue and asked why proposals to decriminalise had been dropped.
Baroness Hoey said the licence fee belonged to a “bygone age” and should be abolished.
The non-affiliated peer told the Lords: “Older people are turning off the BBC and younger people have never even turned on.
“The licence fee itself represents a bygone age and should be abolished to be replaced by a choice based alternative.”
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“We remain concerned that a criminal sanction for TV licence evasion is increasingly disproportionate and unfair in a modern public service broadcasting system.
“However, we recognise changing the sanction would have wide-ranging impact for licence fee payers and has the potential for significantly higher fine and costs for the small minority who evade.”
Lady Barran added the enforcement of the licence fee was not a matter for the Government but one for the BBC.
However, she added under the current system, the levels of evasion were the lowest in Europe.
Tory former sports minister Lord Moynihan said he was glad the minister agreed the criminal sanction was disproportionate and called for a swift change to a civil penalty system.
Lady Barran said a civil penalty would need to be “sufficiently robust” to underpin the legal requirement to hold a licence and the Government was keeping this under review.
The BBC has argued the current system is “the fairest and most effective”.
A BBC spokesman said: “The licence fee continues to ensure that the BBC is an independent, universal broadcaster, committed to serving everyone.”