Internet companies will be fined up to 4% of their revenue if they fail to remove terrorist content within one hour of being notified by authorities, under legislation approved by MEPs.

The civil liberties committee approved the move by 35 to one, with abstentions, but removed an obligation on companies to monitor uploaded content or use automated tools.

MEPs also decided that in the first instance of receiving a removal order, an internet platform should be given 12 hours’ notice before the one-hour notification comes into force.

European commission sources expressed their disappointment at the MEPs’ dilution of the measures, claiming that small internet platforms had played a large role in disseminating footage of the Christchurch shootings.

The Conservative MEP Dan Dalton had already faced criticism for holding up the vote in the committee, leading the British security commissioner, Sir Julian King, to question his motives.

The issue took on particular urgency following the livestreaming of shootings in Christchurch, New Zealand. Facebook removed 1.5m videos of the mosque shootings “in the first 24 hours” after the attack.

Dalton insisted that he had been seeking to build cross-party consensus for the legislation, which has been criticised by smaller platforms for its onerous obligations.

He said: “Apparently, if MEPs dare to question a comma or full stop of the commission’s proposal they are either trying to run down the clock or they are in the pocket of big tech firms.

“This is not true and ultimately damages faith in politics. It is a blatant smear campaign directed against this parliament, conducted in the pages of newspapers that should know better.

“Any new legislation must be practical and proportionate if we are to safeguard free speech,” Dalton said. “Without a fair process we risk the over-removal of content as businesses would understandably take a safety-first approach to defend themselves. It also absolutely cannot lead to a general monitoring of content by the back door.”

This week the British government proposed regulating social media companies for the first time, with executives potentially facing fines if they fail to block terrorist propaganda or images of child abuse.

The regulations proposed on Monday would create a statutory “duty of care” for social media companies such as Facebook and Twitter to protect young people who use their sites.

Facebook took in $55.8bn in revenue in 2018. A fine of 4% would amount to $2.2bn (£1.7bn).

The rules would be overseen by an independent regulator funded by a levy on internet companies.

Earlier this month, Australia’s parliament passed legislation to criminalise internet platforms for failing to take down violent videos and audio.

Executives could be jailed for up to three years.

Companies would face penalties of up to 10% of annual revenue if they failed to remove violent content in an “expeditious” manner.