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VoIP services can offer small businesses improved telephone services and cheaper bills, according to Analysys.

However, a number of small businesses were failing to take advantage of such offers because of a lack of understanding of what the service can provide, the strategy and management consultancy claimed.

Margaret Hopkins, Analysys associate, added that VoIP needed to businesses were most likely to use the service when its benefits were made clear.

She also added that the product should be sold on the features and not the technology.

Despite failings by some providers to attract small business customers, a growing number of larger companies were installing VoIP systems when they moved in to new premises "without a second thought".

Vonage provides an internet phone service that is tailored to small businesses and homeworkers. Customers can use their broadband connection to make cheap calls throughout the UK and abroad. The V-Plan 4 is available for just £12.76 a month excluding VAT.