It would appear that BT Retail has rolled back some changes it made to the BT Yahoo! email platform. The problems were reported last week and affected things like the sending of email where the from: address was not the email accounts default address.
The email security enhancements we introduced earlier this month, although only affecting a minority of our customers, had a greater impact than we had expected. This is an important security enhancement needed to prevent spam and phishing abuse on the Internet however we rolled-back recent phases of this work as soon as we realised the impact it was having on customers and this will have cleared most of the recently-experienced 553 errors.
If you have use a different email address in the "From" field of your email client to that of your BT Yahoo! email address then it can still be used as long as the email address is not another BT or Yahoo! email address. This means that email addresses such as those of other email service providers (i.e. @tesco.net, @gmail.com, @tiscali.co.uk) or a personal domains can now be used in the "From" address field. This is a temporary state and we will have to deploy a fix to only allow this if these email addresses have been verified but we will only restart this change once we are satisfied the customer journey is as clear and simple as possible and we have communicated to our customers in advance.Statement from BT on BT Yahoo! SMTP Email Issues
The full statement including links providing help for those using Outlook 2003 who may still be getting 553 errors can be read over in our forums.
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"This is an important security enhancement needed to prevent spam and phishing abuse on the Internet"
Sounds awfully similar to how they described Phorm...
http://webwise.bt.com/webwise/index.html