The House of Lords last night moved to calm fears among internet service providers (ISPs) that they would bear the brunt of the cost of implementing the so-called snooping bill.

An amendment to the Regulation of Investigatory Powers (RIP) Bill was passed by 131 votes to 119 stating that the Home Secretary "shall" contribute a "fair" amount to the costs incurred by ISPs. The original legislation gave the government more discretion over how much, or how little, it would pay.

The amendment was made because peers had no confidence in government estimates as to the cost of installing and running 'black box' email interceptors, and felt that it was unfair to leave ISPs to meet most of the costs.

During the Lords debate last night, government minister Lord Bassam again insisted that the total cost of the black boxes would come to no more than £20m over the next three years. He also said the situation would be reviewed in April 2004.

Installing the equipment is relatively inexpensive. The government believes this would cost only £500,000, although other sources put the cost as being higher.

However, estimates on the cost of making sure the boxes can do their job and cover all future technological developments are significantly bigger and vary enormously.

Lord Cope, who has been leading opposition to the Bill, referred to research that suggested costs could be as much as £650m.

Lord Bassam's assurance that the government would put aside £20m to help pay for the black boxes failed to convince peers. The amendment was then passed ensuring that a "fair" share of the costs were met by the government.

However, ISPs are still far from happy. A spokesman for the ISP Association said ISPs were still concerned and were planning to contact members of the House of Lords on Friday to ask for more amendments to be made before the Bill receives its third reading and returns to the House of Commons.

Basic internet access in the UK is becoming less expensive for consumers all the time thanks to free access and unmetered and low-tariff phone calls. But fears have been growing that a hefty bill for installing and operating the black boxes may increase the cost of surfing as ISPs passed costs on to consumers.