Broadband operates at speeds up to 20,000 times faster that normal phone lines.

The East of England Development Agency has awarded a £3.4m grant to Norfolk County Council to establish the network.

Work on the project will begin immediately and the system could be up and running by 2004.

Charles Clarke MP welcomed the plan

The work will involve laying cables under the city streets, but the council aims to minimise disruption by using space in sewers and river beds.

Broadband can be used to send huge amounts of information through the cables - for example video films.

Brian Hayes, head of organisation and development at EEDA, said: "Broadband networks can, in many ways, become the trade routes of the future, so it's absolutely vital that places such as Norwich are not bypassed in favour of the big cities as access to broadband develops."

Charles Clarke, Norwich South MP and Education Secretary, said: "This is a major breakthrough for Norfolk and Norwich and will make a major contribution to our future economic success."

Once the network is created, Norfolk County Council could continue to own the new cables or sell them on to another firm and the cables are likely to be let to internet service providers such as BT.