The scheme is expected to be announced by the Communications Minister, Stephen Conroy, and Ms O'Donnell in Melbourne today. Complaints lodged with the ombudsman against each telecommunications company will be monitored and logged daily, with monthly results analysed and discussed with each company. At the conclusion of the six-month scheme, report cards will be offered for public scrutiny and failure by any company to show an acceptable level of improvement in its customer complaint handling will be handed over to the industry's regulators, the Australian Communications and Media Authority and the Australian Competition and Consumer Commission.

The ombudsman said it was time the industry woke up and made complaint handling a priority. "If [the companies] are going to say they're serious about customer service, then let the whole community hold them to account." For the first time in the ombudsman office's 17-year history, complaints over poor customer care and complaint handling have outnumbered unresolved gripes over billing and payments. According to the 2007-08 annual report, 149,742 complaints were handled by the ombudsman, and many of these involved multiple problems, raising the number of complaint issues to 268,645 - an increase of 61 per cent from the previous year. Almost a third of all problems were over customer care or complaint handling. Senator Conroy said the telecommunication providers needed to lift standards. "These statistics are of serious concern for the Government and consumers, and they ought to be of serious concern for all CEOs in the telecommunications sector," he said.

The chief executive of the Consumers' Telecommunications Network, Teresa Corbin, said if the scheme failed to deliver measurable improvements in customer service, government regulation was the only option left. Ms Corbin said the regulatory body was extremely restricted in its ability to enforce a code the industry treated as voluntary.

"Customer service throughout the whole industry is woeful," she said. "Consumers are hung out to dry. Many never bother to complain in the first place because they know it's just too hard." Ms Corbin's husband, Julian Dunn, refused to give up after he was sold a faulty mobile phone by Telstra in March. He returned it to his dealer but six weeks later the company denied it had received the phone, then confessed it had lost it. The company then tried to sell Mr Dunn a new phone under a new contract, while still charging him under the old contract. After the ombudsman intervened Telstra promised a new handset, but the company billed Mr Dunn for it anyway, sending him back into the complaint cycle. In September Telstra finally found the original faulty phone. "The system is designed to frustrate you so you just give up," Mr Dunn said. "It was a never-ending circle for six months. By the time it was over it felt surreal."

Neither Telstra nor Optus returned the Herald's calls yesterday.