Madasafish and PlusNet are to combine their networks and infrastructure in December, it has been announced.
The two BT-owned ISPs said the move would allow them to offer "fast, forward-looking internet and talk services" and "deliver better and more exciting services in the future".
Under the terms of the merger, however, the services, billing and customer support will remain separate.
An e-mailed statement from Madasafish to its broadband customers said: "We will continue to be Madasafish - your award-winning Customer Service and Technical Support teams will not change and the great standard of service that you receive will not change."
Further details regarding the merger are to be announced by the firms over the next few months, the statement added.
BT Retail acquired Madasafish in July this year, having purchased PlusNet in November 2006.