Australia's corporate watchdog has admitted to inadvertently blocking access to about 250,000 innocuous websites in addition to the 1200 it had already accidentally censored.

ASIC made the concession in a statement at a senate estimates hearing on Tuesday night, after it caused controversy by interpreting a 15-year-old law in the Telecommunications Act as giving it the ability to block websites.

ASIC has been revealed to have blocked 250,000 innocuous websites. Credit:Arsineh Houspian

The largest number of sites censored when attempting to block one particular site ASIC believed was defrauding Australians was 250,000. Of these, ASIC said about 1000, or 0.4 per cent, were active sites. It said the 249,000 other sites hosted "no substantive content" or offered their domain name up for sale, rather than hosting a fully-fledged active site.

ASIC asked internet service providers (ISPs) to block sites it believed were defrauding Australians by IP address (such as 203.56.34.11) instead of domain name (such as sitedefraudingaustralians.com). This meant thousands of other sites were blocked in the process, as many sites are often hosted on one shared IP address.