Mr Thompson said the plans involved 'difficult choices'
Up to 1,800 staff will also be made redundant - primarily in news, BBC programme-making and regional centres.
The BBC will also sell-off its flagship Television Centre, under the plans to make up a £2bn budget shortfall.
Director General Mark Thompson said the plan will deliver "a smaller, but fitter, BBC" in the digital age.
The six-year-plan, called Delivering Creative Future, was prompted by a smaller than expected licence fee settlement from the government.
Every part of the BBC will be required to make efficiency savings.
The main changes include:
Across TV as a whole, the BBC plans to commission 10% fewer hours, saving £100m every year.
Despite press speculation, digital channels BBC Three and BBC Four will remain.
Jana Bennett, director of BBC Vision, said there would be an emphasis on quality.
Repeats during the BBC One peak viewing times would continue to be kept at a minimum.
Programmes like Panorama, Imagine, Horizon and Who Do You Think You Are? are "safe", but there will be less light factual "middle-ground" programming, she said.
Ms Bennett also said there would be a "significant investment" in High-Definition TV, which launches next year, and a shift to on-demand and interactive programming.
She said plans to make programmes available through the iPlayer and other interactive platforms were "meeting the needs of our audience".
Despite 660 redundancies in BBC Vision, she said the BBC would continue to provide a wide range of original drama, such as Spooks, as well as comedy, popular entertainment, and "world class" factual output.
Up to 370 people will be made redundant in BBC News by 2012, but the process is expected to be pushed through "as fast as possible".
Mr Thompson told staff: "BBC News is, and will remain, the cornerstone of the whole organisation. The proportion of content spend that goes to News will go up not down over the coming years.
"We have a powerful and coherent vision of what BBC News can become in a fully digital world.
"We think we can significantly reduce duplication in newsgathering and production without our most important flagships like Today and Newsnight losing their distinctiveness and their character."
Plans for BBC journalism include an enhanced on-demand news, sport and local information for the digital age.
There are also plans to build content for younger audiences, including a multi-media Radio 1 Newsbeat.
Mr Thompson added: "I've devoted almost my whole working life to this organisation, much of that not as a suit but as a rank-and-file programme-maker.
"Like many of you, I love the BBC and what it stands for. I love it too much to see it drift steadily into irrelevance.
"For the BBC then, success depends not just on riding the digital wave but on really living up to our audience's expectations of us in terms of quality."
BBC NET REDUNDANCIES BY DEPARTMENT
|Vision||Factual, children's and entertainment television||640 - 660|
|Nations and Regions||Regional news and programmes||510 - 550|
|News||News for TV, radio and new media||355 - 370|
|Future Media & Technology||Online, mobile, interactive, archives||120 - 130|
|Audio and Music||Music radio, audio on other platforms||65 - 75|
|Sport||Sport on TV, radio and new media||Up to 20|
|Professional Services||Marketing, legal, finance etc||Up to 75|
|Total net redundancies of about 1,800 expected|