According to the plans, the government 'will move to legislate to require internet service providers to take action on illegal file sharing' which record companies and film companies say is costing them billions of dollars in lost revenue.

The proposals were included in a Green Paper - the first step to changing a law in Britain - on the creative industries that is due to be published next week.

The Times said that the plans would involve a 'three-strikes' regime - users would first receive an e-mailed warning if they were suspected of illegally downloading films or music.

They would then receive a suspension from their Internet service upon their second offence, and face a termination of their Internet contract if they were caught on a third occasion. -- AFP