The Foreign Affairs Select Committee said the 79-year-old service was so valuable to the UK its income should be ring-fenced and a 16% budget cut reversed.
MPs launched an inquiry into the service after the announcement that its £237 million-a-year budget would be cut and 650 jobs lost from its workforce of 2,400.
The coalition claimed that the cut was needed to tackle the budget deficit it inherited from the previous Labour government.
Committee chairman Richard Ottaway said: “The value of the World Service in promoting the UK across the globe, by providing a widely-respected and trusted news service, far outweighs its relatively small cost.
“The recent dramatic events in North Africa and the Middle East have shown the ‘soft power’ wielded through the World Service could bring even more benefits to the UK in the future than it has in the past, and that to proceed with the planned cuts to the World Service would be a false economy.
He added: “We do not believe the decision to transfer funding responsibility for the World Service from the FCO to the BBC will make the World Service’s funding more secure.
“Despite all assurances, this decision could lead to long-term pressure on the World Service budget, with the risk of a gradual diversion of resources to fund other BBC activities.
“No transfer of funding responsibility for the World Service from the direct FCO Grant-in-Aid to the BBC should take place until satisfactory safeguards have been put in place to prevent any risk of long-term erosion of the World Service’s funding and of Parliament’s right to oversee its work.”
MPs found the World Service successfully promoted British values across the globe and had a reputation “exceeded by none”.
It suggested switching part of the Department for International Development’s budget – one of two protected from cuts – to fund the World Service.
Source: Sky News