Thought i'd give an update on this.
Still getting packet loss at random times of the day, sometimes the connection is ok, but then suddenly will revert back to loads of packet loss.
Have contacted Sky who reported a fault to BT for me, BT initially did not find a fault, Sky sent me a new router (V1) and this was tested (still same problems) The fault was then reported back to BT and for a period of about 5 days the connection was fine, no dropped connections at all.
The dropped connections have started again, I phoned SKY and apparantely BT had resolved the fault (around the time my line was fine) they did not say what BT had done.
Not sure what they would of done, but it was only a quick fix as the problem is back again, I have once again contacted SKY who raised a new fault.
Im pretty much at the end of my tether here, I phoned SKY back for an update and was asked to go through all the standard trouble shooting again, which has really ****** me off.
Any ideas what I should do? Im gonna try and phone them back again tonight to see if I can get through to a helpfull agent, although chances of that are very slim indeed