India plans to auction the airwaves needed to offer so-called third generation or 3G mobile phone services, the government announced, in a move that could raise billions of dollars.

All radio frequencies for providing 3G services would be offered through an auction process in which telecoms companies -- existing operators, licence holders and new international players -- could bid.

"The 3G licences will be granted through a controlled, simultaneous ascending e-auction, by a specialised agency to ensure transparency in selection process," Communications Minister Andimuthu Raja said late on Monday.

Raja, who gave no date for the auction, also unveiled guidelines for wireless broadband services -- called WiMax services -- and said this would help increase broadband penetration.

The government could easily raise more than three billion dollars through the 3G auction, industry experts said.

"The government has decided to release 3G spectrum in 2.1 gigahertz band with immediate effect," Raja told reporters in New Delhi.

The announcement of the immmediate release of spectrum for 3G mobile services puts India's mobile market -- the fastest growing in the world -- on track for a new level of wireless telephony.

The move dwill give mobile users access to high-end data applications on their phones, including high speed interactive gaming and internet access, video conferencing, video streaming and other multi-media features.

Raja said he wanted "healthy competition" and the auction would not be limited to India's exisiting 2G players.

"I want all the players to bid for it," he said.

Foreign firms would be allowed to bid subject to security clearances by the home affairs ministry.

The news marked a major change from sector regulator's recommendations that only existing operators be allowed to bid for 3G spectrum.

The ministry also announced it would let mobile phone subscribers keep the same number if they switch operators.