We report on the experimental observation of extreme laser spectral broadening and a change in optical transmission in gallium phosphite induced by 25 MV/cm terahertz (THz) single-cycle internal field. Such intense THz radiation leads to twofold transient modifications of the optical properties in the electro-optical crystal. First, the electric field provokes extensive cross-phase modulation via the chi((2)) and chi((3)) nonlinearities on a copropagating 50 fs near infrared laser pulse which turns into 500% spectral broadening. Second, we observe an instantaneous change of the optical transmission occurring at the THz field which is alleged to interband Zener tunneling and charge carrier density modification by impact ionization turning the semiconductor in a metal-like transient state. The presented scheme displays a pathway to coherently control the optical properties of semiconductors on an ultrafast time scale by a strong THz field.