The BBC director general, Tony Hall, has made a surprise U-turn and cancelled about £10m of planned cuts to local radio in order to help the corporation combat fake news.

The move was announced on the eve of the 50th anniversary of the creation of the corporation’s first local radio station, BBC Radio Leicester.

The BBC has reduced its investment in its 39 regional radio stations as more people receive their news from digital providers such as Facebook.

A review of BBC local services began last year was due to make about £10m in cuts as the BBC prepares to lose £650m from the abolition of licence fees for the over-75s in 2020, as part of its funding deal agreed with the government.

However, on Wednesday evening Hall said BBC local radio was becoming more – not less – important because of the increase in fake news.

In a speech at a radio awards event in Coventry, the BBC director general said: “For many years the BBC has been reducing its investment in local radio. The development of new technology and the growth of smartphones has seen many people getting their local news, weather and traffic information digitally.

“But the rise of digital technology has also seen the rise of fake news, not just on a global level but on a local one as well. That’s why the role of BBC local radio is actually becoming more important – not less.”

Hall said he wanted a “renaissance” in local radio to help better understand the UK.

“England’s changing. It’s always been a patchwork of communities, with quite distinct identities. While Newcastle’s population is getting older, Bradford’s is getting younger and Birmingham is becoming one of the most diverse cities in Europe. Decision-making is being devolved too – there are mayors in some of the big metropolitan areas and that’s having an impact.

“I want to hear the sound of England as it changes. So while other media are becoming creatively less local, I want us to become even more so and to connect with our audiences in new ways.”

He added: “Local radio is in the DNA of our communities. I think that is more important than ever.”

The BBC will decide next year exactly how the increase in investment will be funded but said the £10m cut planned for local radio would instead be absorbed by other parts of the BBC.

In a signal of intent, the shared evening programme which usually broadcasts on all of the BBC’s local English radio stations will be replaced by local content.

Cuts to local radio are unpopular politically. About 6 million listeners tune in each week to the BBC’s regional stations and the last time the corporation made cuts it was criticised by its then governing body, the BBC Trust, and by MPs.

BBC local radio has given the first break to a number of well-known faces. A list of 50 of the top names who cut their teeth in BBC local radio , compiled by the BBC, includes Richard Hammond (Radio York), Jeremy Paxman (Radio Brighton), Dermot O’Leary (BBC Radio Essex), Vanessa Feltz (Radio Greater London), Sophie Raworth (BBC Greater Manchester), Julie Etchingham (Radio Leicester) and Richard Madeley (Radio Cumbria).