Phorm is a controversial system of internet advertising

UK internet service provider TalkTalk has pulled the plug on its agreement with online behaviour tracking firm Phorm.

It follows news earlier in the week that BT had no immediate plans to use the service.

Phorm has developed technology which collects information on web use in order to better target adverts but it has proved extremely controversial.

The loss of its key partners saw Phorm's shares tumble by more than 50%.

Phorm said that TalkTalk, the second biggest broadband provider in the UK behind BT, had ended its agreement with the firm.

TalkTalk's plans were not as advanced as BT which had undertaken three trials of the technology.

"The directors note that this relationship had not extended to any form of trial in contrast to BT and some international internet service providers," a statement from Phorm read.

It also noted that "privacy was not a factor" in BT's decision to pull the plug on the technology.

Virgin Media, which also expressed interest in the system, was still reviewing it, according to Phorm.

Phorm is currently trialling its software with South Korea's largest ISP and is in discussion about the use of the technology with ISPs in 15 other countries.

Shares in Phorm slumped a farther 13% following the announcement.