The Bill aims to provide all commercial radio stations with a time frame for digital switchover in 2015 and includes greater flexibility in the current localness rules.
The move has been welcomed by the commercial radio industry's official body, the RadioCentre, which claims the proposed digital radio upgrade will offer a better service for listeners, as well as improved opportunities for all commercial radio stations.
Andrew Harrison, chief executive of the RadioCentre, which represents more than 270 groups including the three largest, Global Radio, Bauer and GMG, called the radio clauses in today's Bill "pivotal for the future of the radio industry".
He said it offers the prospect of "greater choice for listeners, more interactivity and better functionality" and that the RadioCentre had been "reassured that the Government understands the importance of ensuring a viable future for all stations, whether on digital or FM".
However, today's Bill has attracted strong criticism from former RadioCentre members who cancelled their membership with the association last month in disgust.
UTV Media, UKRD Group and The Local Radio Company have called on Peers to "stand up for listeners and local radio" by rejecting the Bill.
The commercial groups claim the proposed legislative changes fail to prioritise the future security and sustainability of local commercial radio.
UTV, UKRD and TLRC, which together operate a national station, TalkSport, and 30 local radio stations across the UK, claim that at present, more than 120 (nearly half) of all local commercial radio stations lack any viable route to digital transmission.
Meanwhile, DAB digital radio accounts for just 13% of all radio listening and only 3% of listeners say that they are dissatisfied with the choice of radio stations available to them on existing platforms.
Scott Taunton, managing director of UTV Media, said: "What radio really needs is some meaningful deregulation and licensing reform to enable it to thrive and adapt in the multimedia age.
"The Digital Economy Bill shows that government is out of tune with listeners, who are delighted with the broad choice and accessibility that radio already offers."
William Rogers, chief executive of UKRD and The Local Radio Company, slammed the Bill for being "fundamentally unfair and dishonest" , and added: "We need to inject some honesty and fairness into this debate.
"Where is the fairness in a proposal to permit 100% of the BBC’s local radio stations a digital future and deny over 100 local commercial radio stations the same opportunities?
"What is honest about suggesting to millions of listeners in the country that they will be delivered a wonderful digital listening future when the results will be to deny them the opportunity to listen to their favourite local radio station?"
However, members of the RadioCentre have attempted to downplay the split by stressing that more than 90% of the industry has welcomed the Bill.
Paul Eaton, director of radio at Arqiva, said: "The industry knows that digital radio coverage must be expanded and enhanced in order to bring the benefits of digital radio to the whole population.
"We anticipate that this will involve some re-planning of multiplexes and that will only be possible with the measures introduced today by the Digital Economy Bill.
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