The Australian digital policy group representing some of the world's largest internet companies has slammed the government's unfettered ability to block websites under Section 313 of the Telecommunications Act.

In April 2013, following a bungle by the Australian Securities and Investments Commission (ASIC) that resulted in accidentally blocking customer access to 250,000 websites for at least two ISPs -- when the agency was just seeking to block websites associated with investment fraud -- it was revealed that at least three commonwealth government agencies had been using Section 313 of the Telecommunications Act to compel ISPs to block customer access to certain websites on their behalf.

Much of the Australian Federal Police's use of the power has been to block child abuse websites on the Interpol "worst of" list, and the blocking of those websites was announced at the time. However, the ASIC mishap showed that government agencies were seeking to have websites blocked for a wide variety of reasons, with no oversight or checks put in place.

As a result, Communications Minister Malcolm Turnbull launched a parliamentary inquiry into the use of the power, with his department advocating that agencies will need department head or ministerial approval, and announced to the public when a government agency requests that a website be blocked.

While government agencies have broadly argued that they should be allowed to continue to use the power to block sites, while insisting that it is not in fact a form of internet filtering, the use of the power has alarmed some of the world's largest internet companies.

The digital policy group that represents 460 companies including eBay, Facebook, Freelancer, Google, and Yahoo7, AIMIA, said in its submission to the inquiry that while the blocking of child abuse websites through s313 is uncontroversial, it is the use of the power "to mandate blocking access to a much broader range of internet sites that are not readily criminal on their face".

"This is a matter of great concern. In effect, s313 is being used as a de facto internet filter, without any procedural safeguards or oversight," the group said.

"Our industry is concerned that there is no natural limit to the apparently continuing expansion of use of this provision."

The group said that the scope of the section of the Act is "extremely broad", with nothing limiting the government to requests for blocking only illegal content.

"This has enabled the use of the provision to block content in ways that would appear to stray well beyond what was intended when the predecessor to s313 was introduced."

Additionally, AIMIA said that any officer in a federal, state, or territory department could make a request for websites to be blocked.

"The AIMIA Digital Policy Group respectfully submits that it is inappropriate for s313 [to] be used for anything other than blocking the Interpol blacklist of 'worst of the worst' illegal content, and that an appropriately senior law-enforcement or regulatory official should be required to authorise any such request."

ASIC has demanded that it be allowed to block websites, despite professing to not understanding the implications of its bungled request.

"Our internal review identified that the ASIC teams requesting s313 blocks were not aware that a single IP address can host multiple websites," ASIC stated.

The parliamentary committee is due to report back to government by July 1, 2015.

It comes as Turnbull has claimed that another government proposal, which would force ISPs by court order to block copyright-infringing websites, is also not an internet filter.