Any attempt to change the 92-year-old broadcaster provokes a fierce reaction in Britain, where it claims a unique cultural status from its role in showing everything from royal weddings and sports events to local news and popular dramas.
Setting out proposals for the biggest overhaul of the BBC in at least a decade, the government said changes in viewing habits meant the current scale, scope and funding of the corporation may no longer be appropriate.
'With so much more choice in what to consume and how to consume it, we must at least question whether the BBC should try to be all things to all people,' Media Secretary John Whittingdale told parliament.
Supporters of the BBC say it is a prized national institution that projects British culture around the world while providing essential domestic and international news.
But opponents as diverse as Scottish nationalists, media tycoons and some in Prime Minister David Cameron's government say the BBC is a bloated organisation that throttles commercial competition and fails to properly balance its news coverage.
'We believe that this Green Paper would appear to herald a much diminished, less popular BBC,' the corporation said of the government's consultation document.
'That would be bad for Britain and would not be the BBC that the public has known and loved for over 90 years.'
Known affectionately as 'Auntie', the BBC runs nine national TV channels, 10 national radio stations and a comprehensive website. With an overall income of 4.8 billion pounds ($7.5 billion) a year, it employs nearly 19,000 people.
It is currently funded by a 145.50 pound ($226.92) licence fee paid by every TV-owning household as well as by some commercial income.
After an unexpectedly decisive election victory, Cameron's government is in a strong position to take on the BBC.
Whittingdale said the government would examine whether the BBC should be reduced in size, whether a subscription service or home levy would become more appropriate in time, and whether it needs stronger oversight from a new external regulator.
Its commercial arm, BBC Worldwide, which promotes and sells its programming around the world, could be privatised.
'Given the vast choice that audiences now have, there is an argument that the BBC might become more focused on a narrower, core set of services,' the government said. 'A smaller BBC could see the public pay less for their TV licence and would also be likely to have a reduced market impact.'
Long criticised by successive British governments and sections of the right-wing domestic press, the BBC says polling shows that audiences think it produces a broad range of high quality programmes.
'Would it not be profoundly unpatriotic to seek to diminish the BBC and thereby diminish Britain?' said Chris Bryant, a lawmaker from the opposition Labour Party.
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.