Sir Michael Rake has been named as the new chairman at BT, taking over from Sir Christopher Bland who will step down in September.

Sir Michael is joining from KPMG, one of the world's four largest accountancy firms, where he has worked for 33 years and is currently international chairman.

In his new role, Sir Michael will take a huge pay cut after last year being paid more at KPMG than BT's chairman, chief executive and finance director put together.

Sir Michael, who was knighted in this year's honours, earned a total of £3.6 million in 2006, compared with a previous £3 million for his UK and global responsibilities at KPMG.

In contrast, Sir Christopher earned a basic salary of £500,000 last year, and a £32,000 contribution to his pension.

Overall, Sir Michael's pay packet at KPMG outstrips the total remuneration and benefits awarded to BT's chief executive Ben Verwaayen, finance director Hanif Lalani and Sir Christopher by 28.6 per cent. Last year Mr Verwaayen earned £1.6 million in basic and benefits and Mr Lalani was paid £759,000.

KPMG has begun the process of appointing his successor. Sir Christopher is leaving BT after joining in May 2001 from the BBC where he chaired the board of governors.