In its latest report, Public Service Broadcasting: short-term crisis, the committee warned that commercially funded public service broadcasters "face severe financial problems".
The committee added there would be dangers if the BBC was even more dominant in the provision of news and current affairs. It added that such a position would also be bad for "independent producers, actors and other suppliers, who would suffer all the disadvantages of dealing with a monopoly commissioner".
The report said the introduction of a new PSB fund - so-called contestable funding since would-be PSB providers would bid to access it - "is justified to ensure there is sufficient free public service provision".
The fund would not, the report said, require additional taxpayer support. One proposal is that money from the licence fee that is now being spent on digital switchover, should be paid into the fund when the digital switchover ends in 2012.
The committee dismissed plans to merge parts of Channel 4 and BBC Worldwide in order to ensure the future provision of public service broadcasting beyond the BBC, as "corporate engineering". Instead, it concludes the partnership proposals currently put forward by the BBC to aid commercial PSB providers were more desirable.
Committee chairman Lord Fowler said: "We do not want to go back half a century to a time when the BBC was the monopoly provider of public service broadcasting. That would be bad for the public and bad for the BBC.
"Today, ITV regional television news is under threat - at the same time as regional newspapers are struggling to survive - and new UK drama is being cut back. Channel 4 forecasts major problems unless action is taken."
Lord Fowler added: "The case for some kind of intervention has been accepted by Ofcom and the Government, and their favoured solution is a merger of Channel 4 and BBC Worldwide. We did not see the logic of this 'corporate engineering' proposal that does nothing to solve the wider problems in the commercial sector."