The new service will be available later this year but details of subscription prices and a name for the service have not been released. The new service will attempt to take on Apple’s iTunes.

Sky says it is in talks with other music companies, both major and independent and plans to announce new partners soon.

The service will allow users to have access to streamed tracks along with a set number of download-to-own songs from Universal’s vast catalogue that includes artists such as U2, Kanye West, and Amy Winehouse.

Downloaded songs will work on any device that can play MP3s including iPods and mobile phones.

The online music service will be operated by a new joint venture company, in which Sky will be the majority shareholder and Universal will also become a shareholder in the company.

"It’s clear that there’s huge demand for online music and companies like Sky and Universal Music are well placed to work together to meet consumers’ needs," said Mike Darcey, Chief Operating Officer, BskyB.

"We aim to offer an easy and affordable service for all UK music fans, while ensuring that artists are properly rewarded for their creativity."