Business secretary Lord Mandelson's plans to curb online piracy by enforcing a 'three strikes' rule look to be jeopardy after a new statement from the European Union.
Mandelson's proposals would see people cut off from the internet after a third report of downloading content illegally.
But the EU said on Friday that individuals have the right for their case to be heard by a court before being cut off from the internet. The right to a judicial process is not part of Mandelson's approach.
The EU's latest statement on the issue followed the publication of its reforms to the 2002 Telecoms Rules designed to make the European telecoms market more unified.
Agreement between European Parliament members, the European Council and the European Commission was reached on 5 November after years of debate.
The most controversial reform in the package relates to the restriction of internet access in order to target illegal downloading.
Internet freedom was considered too important by the Parliament to be restricted, even after considerable pressure from the Council, the body that holds government representatives from the member states.
The European Parliament tried hard to change the directive in question and proposed Amendment 138, which read: 'No restriction may be imposed on the fundamental rights and freedoms of end users without a prior ruling by the judicial authorities, notably in accordance with Article 11 of the Charter of Fundamental Rights of the European Union on freedom of expression and information.'
But in a compromise earlier this month the Parliament decided that citizens' internet access can be restricted if necessary, but only after a "fair and impartial procedure including the user's right to be heard". There was no mention of the need for judicial involvement, which particularly worried human rights organisations.
The UK government argued at the time that its three strikes rule to tackle illegal downloading could go ahead as planned, although commentators, such as the Open Rights Group and internet service providers like TalkTalk, expressed doubts that the government had interpreted the EU directive correctly.
The EU's necessary "fair and impartial" process will be guaranteed under Mandelson's proposals, because ISPs will have to send customers a series of notifications before they are able to cut off internet access, said the Department for Business, Innovation and Skills.
The government also pointed out that it is working on an appeals process that will allow individuals to speak out against their freedom being restricted.
However, the EU has said in the document outlining the reforms that the judicial process should be used before internet access is restricted.
"Citizens in the EU are entitled to a prior fair and impartial procedure, including the right to be heard, and they have a right to an effective and timely judicial review," it said.
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More than 800,000 home users could be affected