Is your "BT" router running ok ???
This sounds familiar, I have had a couple of customers complain about a similar problem, but they have to reboot the router to get it connected again, and more often than not the blue connection screen would show Idle.
I have to admit I have never tried Telnet or FTP on a router when a customer has reported this, I will make a mental note to do so in the future.
This is course if this is going via ADSL ???
Edit - Just re-read your last post, my suggestion seems unlikley
Cheers
Cris.