Allofmp3.com has more than 300,000 tracks

The lawsuit was filed in New York on behalf of Arista Records, Warner Bros, Capitol and UMG recordings.

They are suing Moscow-based Mediaservices, which runs Allofmp3.com and another music site, allTunes.com.

The record labels say the sites are selling songs without permission. But Allofmp3.com argues it is paying royalties to a Russian licensing body.

The music industry says that the Russian licensing group does not have the authority to collect and distribute royalties.

Allofmp3.com sells albums for about $1 (60p) and charges only a few cents for songs. By contrast, the world's most popular music download service, iTunes, charges $10 (£6) for an album.

'Massive infringement'

Allofmp3.com is already facing legal action from the British Phonographic Industry, on behalf of UK record labels.

"The defendant's entire business... amounts to nothing more than a massive infringement of plaintiffs' exclusive rights under the Copyright Act and New York law," according to papers filed as part of the US legal action.

Visa and MasterCard have stopped accepting credit card transactions for purchases made at Mediaservices' sites.

Allofmp3.com says it pays royalties to a body called Roms, which granted the site its licence to operate.

Roms says the Russian constitution gives it the right to license music to allofmp3.com, even if it has not obtained permission from the copyright holders.

It also claims to collect royalty payments from the download site on behalf of record companies and artists.

"Allofmp3.com's activity is quite legitimate," said Roms general director Oleg Nezus.

"The opinion of foreign copyright owners is just that - their opinion," he told BBC Russian.com.

But the BPI and the International Federation of the Phonographic Industries has said Roms has "no rights from the record companies whatsoever to license these pieces of music".