Having angered Queen Elizabeth and the public, Britain's BBC is set to shed staff with sweeping job cuts this week in the biggest crisis to hit the world-renowned broadcaster since a government clash over Iraq.

The publicly funded corporation, known for its excellence in journalism, has seemingly stumbled from one crisis to another this year, damaging viewers' trust and its credibility.

On Thursday, Director General Mark Thompson is expected to announce plans to cut up to 2,800 positions due to a tighter budget, with news and factual departments to bear the brunt.

Staff and unions have warned the quality of its output will drop. Its bbc.co.uk/news Web site, which it says attracts about 35 million users a month from around the world, will also be affected, according to media reports.

The result is plummeting morale and questions over strategy.

The mood is shocking, said one member of staff, requesting anonymity.

But not everyone is convinced by the tales of woe.

The broadcaster, which does not carry advertising, dominates the British media scene, drawing mass audiences to its main television channels and regularly setting the news agenda.

Its radio stations account for more than 50 percent of the market in terms of the number of listeners tuning in and its Web site is one of the most popular in Britain.

BBC World, its commercially funded, international 24-hour news channel which broadcasts in more than 200 countries, BBC World Service and World Service radio will not directly be affected by the cuts, and BBC Worldwide is Europe's most successful exporter of television programmes.

Media analyst Claire Enders said the BBC has to be seen to be sorry when it makes a mistake, due to its position as a public broadcaster and the scrutiny that brings.

All these games get played out in a very public way, she said. Sack cloth and ashes, boo hoo, heads roll. But in the background is the exceptional performance of an organization that has a guaranteed income. They are immensely fortunate.

IRRELEVANT 'AUNTIE'?

To some, the BBC's problems reflect its struggle to adapt to the digital age.

Fearing irrelevance in a time of so many digital channels, the corporation -- which is funded by a tax on television-owning households -- has launched a host of new channels, radio stations and interactive services to appeal to niche audiences.

Its critics argue that this drive for volume, ratings and viewer involvement has led to its latest problems, including the fiasco with the Queen.

On that occasion, the BBC had to apologize after showing promotional footage for a documentary which wrongly implied that Queen Elizabeth had stormed out of a photo shoot with celebrity photographer Annie Leibovitz.

That followed a string of admissions about faked competitions on well-known charity specials, radio stations and the popular children's series Blue Peter, which hammered viewers' trust in the corporation once fondly known as auntie.

The scandal has spawned damning headlines and red-faced on-air apologies.

Steven Barnett, professor of communications at the University of Westminster, told Reuters the recent viewer deception was not as serious as the Iraq coverage row, but it could have more damaging consequences.

In 2003 the two sides clashed bitterly over a BBC story which alleged the government had hyped intelligence on Iraqi banned weapons. Barnett said that was an old fashioned clash which mostly drew the support of the public and the press.

This latest scandal risks alienating the public and crucially, losing the support of the written media, which now compete much more closely with the BBC for Web site visitors.

FUNDING GAP

It is against this backdrop that the job cuts will come.

Unions say they are expecting up to 2,800 cuts to be announced, with 500-600 coming from the newsroom, after a lower-than-expected license fee settlement with the government earlier this year.

Thompson has said the corporation faces a 2-billion-pound ($4-billion) funding shortfall over the 6-year period and must become leaner. But staff and analysts fear the cuts will damage quality, especially in journalism.

There will be less time for the kind of work the BBC has been so spectacularly successful at, like 'From Our Own Correspondent', Barnett said.

Getting out on the road, getting reports from real people in real places and finding out what is actually going on.

Enders of Enders Analysis said she thought the very public nature of the debate about job cuts was also intended to embarrass the government over the license fee settlement.

I'm in the BBC a lot and it's shocking to have people with first class degrees from Oxford and Cambridge who are basically gophers, picking up guests to take them to the newsroom.

(The BBC) is immensely fortunate, immensely far sighted and the most successful public service broadcaster in the world across its areas of activity, she said.

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