Fans of the Clash, and other music lovers, will no longer be fighting the law every time they fill up their iPod, under government proposals unveiled yesterday.

Owners of digital music players will be acting lawfully when they transfer music from their computer to a digital player or copy a CD for their own use, under proposed amendments to bring copyright law into the digital age.

Consumers who have been technically breaking the Copyright, Designs and Patents Act 1988 by copying tracks from CDs to their PC or digital player, or making an extra copy to play in the car, will now be able to do so for private use. Record labels accept that consumers should not be punished for shifting music from one format to another, but some are concerned it will increase the perception that music can be freely copied with impunity.

The minister for intellectual property, Lord Triesman, said: "In an increasingly digital world we need to be sure that our copyright system keeps up with the times and works effectively. This consultation ... explores where the boundaries lie between strong protection for rights-holders and appropriate levels of access for users." Last year's Gowers review of intellectual property recommended the law be relaxed to reflect the march of technology, but also suggested that punishments for large scale piracy be toughened.

The proposals suggest a new exemption for parodies of copyrighted works, while changes for libraries would allow for the copying of broadcasts for preservation purposes. Consumers would not be allowed to sell or give away the original once they had copied it.

The National Consumer Council's director of policy, Jill Johnstone, said the current situation was "confusing for consumers and it brings the law into disrepute". She said the council supported the changes, but said they needed to be easily understood by consumers. Geoff Taylor, chief executive of the music industry trade body the BPI, said: "We look forward to working with government throughout the consultation; the key thing for us is that any changes to the law achieve the stated aim of clarifying the law for consumers, while not doing harm to rights-holders."

British Music Rights, which represents composers and songwriters, said any changes to the law must be "tightly drawn". Legal experts said it made sense to tidy up a law that had been proved impractical and unworkable, but said it could have harmful consequences for a record industry that has been brought to its knees by digital piracy in recent years.

Hamish Porter, a partner at law firm Field Fisher Waterhouse, said: "There is a danger that it will be interpreted by the young as a green light to burn CDs for their friends."