It would cost Pounds 530 million to create a national digital network linking all public libraries to the information superhighway, a Library and Information Commission report estimates.
The commission says the New Library Network would "radically transform the character of public libraries, giving them a fundamentally new role as managers of electronic content and gateways to a vast wealth of online information".
The cost, which could be spread over the eight years from 1999 to 2007, does not take into account any telecommunications discounts that may be secured from service providers such as BT.
Telecoms watchdog Oftel and the Department of Trade and Industry are trying to work out a deal with service providers.
The report also estimates revenues for the network to be substantial over the eight years, further reducing the overall cost.
The commission also believes European Union funds totalling Pounds 3 million a year could be secured. Total revenue from all sources over the eight years are estimated at about Pounds 386 million.
Thus the LIC identifies a funding gap of about Pounds 100 million, and the government is looking at ways in which this could be made up through lottery funds.
The national digital network will include an educational programme under three broad themes: cultural enrichment, active citizenship and reskilling.
Matthew Evans, chairman of the LIC, said the network would aim to complement the National Grid for Learning.