Lord Mandelson's plans to cut off the broadband connections of internet users who illegally download copyrighted music and films were attacked by privacy campaigners, internet service providers and Labour MPs yesterday as unworkable, unnecessary and potentially illegal.

The surprise decision to reintroduce the disconnection idea, which was ruled out in the government's own Digital Britain report in June, also sparked accusations that the business secretary has been swayed by secret meetings with senior figures from the music and film industry.

Tom Watson, the former cabinet minister who until recently was in charge of the government's internet policy, said the plan "will lead to accusations that the government has been captured by the big lobby operations of powerful rightsholders."

TalkTalk, Britain's largest consumer broadband provider, warned that innocent web users could be disconnected after having their connections hijacked by pirates looking to circumvent the new rules. It added that the move "will likely breach fundamental human rights".

A spokesman said: "Barely two months after the publication of largely sensible and pragmatic measures to tackle the problem Lord Mandelson has, it seems, caved in under pressure from powerful lobbyists in the content industry."

Earlier this month it emerged that the business secretary dined with Hollywood mogul David Geffen at a Corfu holiday villa owned by the Rothschild banking dynasty. Mandelson's advisers deny that this meeting included talk about how to stem the industry's losses caused by illegal filesharing. But Whitehall insiders believe the U-turn is more likely to have been caused by a prior meeting with one of the most powerful figures in the British music business, Lucian Grainge, the chairman of Universal Music, home to Lady Gaga and Rihanna.

Grainge is a fierce opponent of illegal file-sharing and is one of the government's chief industry advisers and part of the so-called C&binet – a group of executives who advise ministerial departments on fostering the creative industries in the UK.

He was consulted during the compilation of Lord Carter's Digital Britain report as part of an ad hoc "gang of five'' that included BSkyB's Jeremy Darroch, Channel 4's Andy Duncan and the Premier League's Richard Scudamore. Before the report was published he told an audience at the British Library, which included representatives of Mandelson's department: "The creators and the investors [in music] cannot exist with illegal filesharing, period. It will decimate the industry."

But the report stopped short of disconnecting the pirates, instead recommending that illegal filesharers should receive letters warning them their activities could leave them open to prosecution.

Believing that the government should have gone further, Grainge is understood to have had further meetings with Mandelson to push for tougher measures.

A spokesperson for the Department for Business, Innovation and Skills said the business secretary had met many representatives of the creative industries and the government's change of stance was not the result of any single conversation.

But the music and film industry has been lobbying hard for tougher measures and Stephen Timms, who replaced Lord Carter's replacement as communications minister said: "It's become clear there are widespread concerns that the plans as they stand could delay action, impacting unfairly on rights holders."

As a result, Timms proposed that persistent illegal sharers of copyrighted material should have their broadband connections temporarily disconnected and the power to introduce this measure, if warning letters failed to have an impact on levels of piracy, should rest with the government, not Ofcom. The government hopes to have its plans for dealing with online piracy included in the autumn's digital economy bill.

But privacy campaigners say the government's new proposals could fall foul of the law — as they did in France earlier this year. Simon Davies, director of Privacy International, warned: "This proposal fundamentally reverses the onus of proof. It establishes systemic accusation. It is fraught with technical impossibility, it invites circumvention and creates a major online conflict between rights holders and users. And these are fundamental rights that are being violated.""Cutting people off the internet for allegedly infringing copyright is disproportionate," added Larry Whitty, chairman of Consumer Focus. "And to do so without giving consumers the right to challenge the evidence against them undermines fundamental rights to a fair trial."

John Petter, head of BT's consumer business, meanwhile, expressed his disappointment at the government's change of direction. "We were broadly supportive of the original plans but these changes run the risk of penalising customers unfairly."

A spokesperson for Virgin Media, meanwhile, added "persuasion not coercion is the key to changing consumer behaviour as a heavy-handed, punitive regime will simply alienate mainstream consumers. The government should be ensuring a balance of action against repeat infringers and the rapid development of new legitimate services that provide a compelling alternative to illegal filesharing."