Internet service providers have struck a deal with government and the music industry to help clamp down on illegal downloading.

The deal, to be announced later today, is thought to include an agreement for ISPs to send out hundreds of thousands of letters to account holders responsible for illegal downloading.

The memorandum of understanding, struck with the BPI, the body that represents record labels, and the government will be announced today ahead of the launch of a consultation on the introduction of legislation to clamp down on offending.

The memorandum has been struck with the UK's six biggest ISPs - BT, Virgin, Carphone Warehouse, Orange, Tiscali and BSkyB - and includes a deal for all parties to work together to develop ways to deal with repeat offenders.

The agreement has been reached ahead of an announcement expected later today by the Department for Business, Enterprise and Regulatory Reform about a consultation on regulatory options to punish ISPs if they fail to take action against the illegal downloading of music, films and TV programmes.

"We have looked to ISPs to acknowledge their responsibility to help deal with illegal filesharing, engage in communicating the issue to their customers, and put in place procedures necessary to effectively tackle repeated unlawful filesharing," said a spokesman for the BPI.

"Achieving this would represent a significant step forward and demonstrate clearly the collective will that exists to tackle this serious issue."

It is thought that BSkyB's announcement of a digital music joint venture with Universal Music earlier this week - the venture has no name, no pricing and no launch date - could have been a move to prove that ISPs are supporting new, innovative, legal digital models ahead of the announcements today.

In February, the culture secretary, Andy Burnham, raised the possibility of introducing legislation to crack down on illegal filesharing as part of a wide-ranging strategy paper designed to look at ways of supporting the UK creative industries and digital intellectual property.

At the time Burnham said that the government preferred to find "voluntary, preferably commercial, solutions" but that it would look to introduce legislation next April if necessary.

The strong stance by the government has alarmed ISPs, which believe that regulation is a step too far.

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