The Abbott government will amend copyright laws to allow courts to order the blocking of overseas websites used for illegal downloads and streaming.

But it is yet to resolve a dispute over who should pay for efforts to warn individual users about the consequences of infringements.

The government has given internet service providers (ISPs) and copyright holders a four-month deadline to develop a new industry code which should canvass a “fair” sharing of the cost of notifying and educating customers about infringement.

The communications minister, Malcolm Turnbull, and the attorney general, George Brandis, said the government would impose “binding arrangements” if ISPs and copyright holders could not reach agreement.

“The government will also amend the Copyright Act, to enable rights holders to apply for a court order requiring ISPs to block access to a website, operated outside of Australia, which provides access to infringing content,” Turnbull and Brandis said in a statement on Wednesday.

“In a world of rapid changes in technology and human behaviour, there is no single measure that can eliminate online copyright infringement. In light of this the government will review the measures, 18 months after they are implemented, to assess their effectiveness.”

The Labor opposition said the government had failed to develop a credible policy and was passing the buck back to industry to reach agreement on a code.

“The government’s only concrete decision is to introduce legislation providing for overseas websites facilitating copyright infringement to be blocked in Australia by court order,” said the shadow attorney general, Mark Dreyfus, and the communications spokesman, Jason Clare.

“Site blocking is unlikely to be an effective strategy for dealing with online piracy. Pirated content is likely to reappear as quickly as it can be taken down.”

The announcement follows the release of a discussion paper on the issue in July.

In a letter to industry figures on Wednesday, Turnbull and Brandis said the code’s objectives included informing customers of legitimate alternatives to copyright infringement.

The code should also include “a process for facilitated discovery to assist rights holders in taking direct copyright infringement action against a subscriber after an agreed number of notices”.

Speaking to reporters in a conference call, Turnbull said the notices to individual users were not about penalising people but were designed to be “educative”.

He said the experience in New Zealand was that most people who received a notice stopped downloading content without paying.

Turnbull said after three or four notices were issued to a user, the rights holders should have the ability “to get the details of the account holder involved and then they can take a civil action for damages in the usual way”.

The minister argued the government’s measures were reasonable and moderate.

“The critical point here is what we are not suggesting is that ISPs should be required to cut off people’s access [to the internet] or slow the speed of the connection or anything like that,” he said.

Turnbull repeated his previous calls for companies to make movies, television programs and music available to users in a timely and affordable manner, saying such a strategy reduced the incentive for people to steal content.

He said it was positive that rights owners were making more content available “on a piecemeal basis” rather than forcing people to subscribe to a whole platform.

Turnbull said he was “reasonably confident” ISPs and rights holders would come to an agreement on an industry code.

He said the rights holders were “the ones with the most to gain financially from a reduction in piracy so I think it’s reasonable to expect that the bulk of the costs will be borne by the rights holders”. But he said ISPs should also contribute part of the cost because their role in providing access to the services could not be ignored.

Turnbull said it would be wrong to characterise the proposed mechanism for content owners to seek the blocking of overseas websites as an internet filter.

“I know the temptation to engage in journalism by click-bait is very strong but this is not, I repeat, not an internet filter,” he said.

Turnbull said it “may be the case” that some users would increasingly turn to technologies such as virtual private networks to avoid detection, although he added that most people did not use such methods.

He said the aim was to “materially reduce” copyright infringement. “This is a very dynamic area and we’re playing a percentage game here; we’re never going to eliminate all piracy,” he said.