Saltaire-based Pace Micro Technology could receive a huge boost if calls for the Government to provide free digital set-top boxes are taken up, the firm said today.

The idea has been mooted by the Commons Culture, Media and Sport Select Committee, which says the Government must act fast to ensure the survival of digital terrestrial television (DTT) in the wake of ITV Digital's collapse.

The committee of MPs said the failure of ITV Digital, which switched off pay-to-view services yesterday, was a ''body blow'' to the Government's hopes of turning the conventional analogue signal off and switching Britain's TV completely over to digital by 2010.

And a report from the select committee, chaired by former Labour minister Gerald Kaufman, says: "In the light of the recent offer for sale of ITV Digital by its administrators, it is the responsibility of Government to act to ensure the availability of the free-to-air channels.

"We believe that consideration should now be given to the Government conducting analyses of the costs and benefits, and market impact, of providing free digital set-top boxes to enable analogue switch-off to be achieved.''

The report added that although digital switch-over was "very important" for the development of the UK's radio frequency spectrum and the Government's vision of universal Internet access, evidence suggested demand for digital services may be tailing off as most viewers interested in specialist sport and film channels had now been signed up.

A Pace spokesman said: "We've been speaking to members of the committee on a regular basis about this. It was one of the suggestions included in the 'digital manifesto' we sent to the Government at the end of last year, so we're more than pleased it's been included in this report. We'll be more than happy to speak to the Government about this if it's something they are going to consider seriously.''

The spokesman said if the Government took up the suggestion, Pace would hope to be involved in supplying the set-top boxes, adding: "It would be a very good move for the company.''

Pace has said it hopes its £99.99 set-top adapter - allowing viewers permanent access to free digital channels for a one-off fee - will play a major role in the switch to digital TV. The box plugs into the back of an analogue TV and automatically tunes itself to receive free-to-view digital channels though the existing aerial connection.

The company has said the closure of ITV Digital - which went into administration in March after telling a court it could not honour its multi-million pound deal with football clubs - will not affect it as business with the firm only accounted for two per cent of revenue. The spokesman said: "It's a failure of a company not of a technology.''