The Greens say their website will fade to black on Australia Day as part of a nationwide protest against the Federal Government's proposed internet filter.

The Federal Government wants to pass laws to force internet service providers to block banned material hosted on overseas servers, but its decision to press ahead with compulsory internet filtering has come under fire from lobby groups and the Greens.

Communications Minister Stephen Conroy says he intends to introduce legislation in the first half of 2010.

Greens Senator Scott Ludlam says he believes more than 500 websites will take part in what is being dubbed 'The Great Australian Internet Blackout'.

The Federal Government's proposed internet filter would force all internet service providers to block "Refused Classification" material.

Mr Conroy says the Government will not determine what is blacklisted on the internet in Australia - rather, an independent body will determine what sites are rated as RC for Refused Classification.

He says the Government will take steps to ensure the filter is transparent and people know why material is being blocked - this may include measures which allow people to appeal the decision to block a page, and notifications to websites that they have been blocked.

But Electronic Frontiers Australia, which monitors online freedoms and rights, has said the Government's plan is flawed.

"Although it may address some technical issues, what it leaves out is far more important," Electronic Frontiers Australia vice chairman Colin Jacobs said.

"Exactly what will be blocked? Who will decide and why is it being attempted in the first place?"

In March, an alleged list of about 1,000 sites already banned by the Australian Communications and Media Authority (ACMA) was leaked online, revealing that harmless sites had also been marked as unacceptable.

Nine ISPs originally agreed to take part but iiNet pulled out of the trial in March, saying the filter would not work and was a "dead parrot".

However, Optus joined the trial in April.