Fairfax Media understands the ministers' joint submission argues that internet providers and rights holders should work together on a code registered with the communications regulator, the Australian Communications and Media Authority. This code would include a scheme in which repeat illicit downloaders are warned via written notices that they are breaching copyright.

The government would retain the option of using the "big stick" of legislative change at a later date if internet providers and rights holders cannot agree on such a scheme.

Past negotiations on a voluntary code have broken down over the question of who would pay. Internet providers have been pushing for costs to be paid for by rights holders, while copyright owners like Village Roadshow are pushing for a 50-50 split.

The government's discussion paper on copyright infringement, released in late July, proposed creating a new legal framework, known as extended authorisation liability, to make internet companies more liable for their customers' illicit downloading. Mr Turnbull admitted in September that the proposal, as outlined in the discussion paper, had drawn unanimous opposition from all sides of the debate as too broad.

Cabinet will be asked to approve the creation of a mechanism allowing rights holders to seek a court injunction ordering internet providers to block overseas websites such as The Pirate Bay providing access to illicit material.