The Australian Government has announced an ambitious A$43 billion (£20 billion) project to extend super-fast broadband across the country in a move that could reshape Australia's telecommunications landscape.

Announcing the plan for a state-controlled company to build the network from scratch, Kevin Rudd, the Prime Minister, described it as the biggest infrastructure project in Australia since the building of Sydney Harbour Bridge.

It will deliver broadband speeds of 100 megabits per second to 90 per cent of Australian homes, schools and businesses within eight years through fibre-optic cables direct to buildings, he said. The remaining 10 per cent would get a wireless upgrade.

"Every person and business in Australia, no matter where they are located, will have access to affordable, fast broadband at their fingertips," Mr Rudd said.

The speeds are 100 times faster than most Australians can access. The plan means Australia will join only a handful of countries including South Korea, Japan and Germany that have broadband fast enough to watch multiple high-quality downloads of movies or television shows at once from the same connection.

Mr Rudd, who had made fast, affordable broadband a key plank of his campaign in the 2007 election, said years of failed policy had left Australia a "broadband backwater". The project would play a major role in "turbo-charging Australia's economic future", he said.

"Just as railway tracks laid out the future of the 19th century and electricity grids the future of the 20th century, so broadband represents the core infrastructure of the 21st century," he said.

The new company, yet to be named, would build the network, funded with government money and private investment at a cost of A$43 billion.

The Government would make the initial investment of A$4.7 billion in the company but would sell its stake within five years after the network was built and fully operational, depending on market conditions, Mr Rudd said.

The plan, which was revealed after the five companies bidding to build the network failed to meet the Government's expectations, has astonished observers, who said it was far more ambitious than predicted. But analysts said it could lead to Australia becoming an international leader in the field.

"This is the most ambitious infrastructure ever undertaken in Australia and will be the most ambitious fibre-to-the-home network anywhere undertaken in the world,'' said independent analyst Paul Budde. "This will set Australia up as potentially one of the international leaders here.''

Australia's geography has proven to be the biggest obstacle to past plans to roll out high speed internet nationally, with its city populations clustered on the coast separated by thousands of miles of sparsely populated Outback.

The project, which will start in Tasmania next year, requires the installation of cables across the continent - a vast undertaking that the Government said would create 25,000 jobs a year during the eight years of construction.

Private firms, such as Singapore's Optus and Canada's Axia NetMedia, had been bidding for a A$10 billion to A$15 billion fibre-to-the-node network offering speeds up to 12 megabits per second.

Mr Rudd said none of the tenders offered value for money, partly because of the global downturn but he stressed that all companies were invited to invest in the new company. The offer re-opens the door to Telstra, Australia's biggest telecommunications company, which had been excluded from the tender process after it failed to meet government guidelines.

The plan has been welcomed by the industry and by workers in remote communities.

Optus, the second-biggest telecommunications operator in the country, described the plan as "visionary", despite failing in its bid to roll out the network. "It's a big step forward that will lift Australia from the broadband laggards where we are today into what we see as being a world leading broadband future," said Maha Krishnapillai, Optus' director of government and corporate affairs.

The Australian Medical Association said it was important for broadband services to be rolled out across the rural areas. "To improve medical care in the bush, broadband services should be rolled out as far as possible into rural and regional Australia and be able to support the transmission of high-quality medical images thousands of kilometres," Rosanna Capolingua, AMA president, said.

However critics, including opposition leader Malcolm Turnbull, warned that the plan could fail if the desired level of private investment was not reached

Mr Turnbull, leader of the Liberal party, said that while high-speed broadband services were essential for education and trade, the Government's "ill-thought out" plan would end up burdening taxpayers without bringing the promised benefits.

He warned that the technology would already be superceded by the time the network was completed in 2018 and said: "The Government has provided no evidence that there will be sufficient demand for this service at prices that enable the network to deliver a commercial return."

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