Despite the best efforts of Adele and Coldplay, the increasing popularity of digital downloads and even a modest resurgence in vinyl, music sales in the UK declined for a seventh successive year in 2011.

According to the latest figures from the BPI, combined sales of digital and physical albums fell overall by 5.6% to 113.2m last year. At the industry peak in 2004, 163.4m albums were sold.

Although digital album sales rose 26.6% to 26.6m, the growth failed to offset the sharp drop in sales of albums on compact disc, which fell by 12.6% year on year to 86.2m. A further 389,000 albums were sold on vinyl and other formats.

The statistics cap yet another turbulent 12 months for the British music industry, which is struggling to cope with losing hundreds of millions of pounds each year to illegal downloads. In November, the debt-ridden record giant EMI – home to the Beatles, Coldplay and Tinie Tempah – was broken up and sold to two of its former rivals, Universal Music and Sony, for £2.5bn.

In the same month, the former Undertones singer Feargal Sharkey resigned as chief executive of the industry body UK Music, which has campaigned on copyright and piracy issues.

While sales may be on the wane – and illegal downloading on the rise – CDs remain the nation's favoured format, accounting for 76.1% of total sales last year, compared with a 23.5% market share for digital and 0.3% for vinyl.

Geoff Taylor, the chief executive of the BPI, said reports of the CD's demise had been greatly exaggerated.

"British music fans understand that the album remains the richest way to connect with an artist's work," he said. "Digital developments grab the headlines, but the CD remains hugely popular with consumers, accounting for three-quarters of album sales.

"Physical ownership is important to many fans and the CD will be a key element of the market for years to come."

The figures show that digital album downloads have grown, with 15 albums selling more than 100,000 digital copies in 2011. Sales of vinyl LPs, meanwhile, rose by more than a third (43.7%) during 2011 to 337,000 – their highest showing since 2005.

In the UK singles market records were broken for the fourth year in a row with sales increasing by 10% to 177.9m in 2011.

Adele proved to be the biggest commercial hit of 2011, with her album, 21, topping the charts after selling 3.8m copies — astonishingly more than double the 1.8m sales achieved by 2010's top album, Take That's Progress. Her debut album, 19, was the fourth bestselling record of the year.

The London-born singer/songwriter also claimed two places in the 2011 year-end singles chart. The recorded and live performance of Someone Like You – recorded at the 2011 Brit awards – together sold 1.2m copies to become the top-selling single of 2011 overall, with her other single, Rolling in the Deep, also ending the year at number nine.

Her success is all the more striking given that she is signed to the independent XL label.

Three other UK acts signed to major record labels – Coldplay, Jessie J and Ed Sheeran – helped ensure that half the top 10 selling artist albums in 2011 were British.

The BPI praised homegrown artists for producing "incredible music that resonates at home and around the world", but said they were not getting the legal support they needed from Westminster.

"While other countries take positive steps to protect their creative sector, our government is taking too long to act on piracy, while weakening copyright to the benefit of US tech giants," said Taylor.

"The UK has already fallen behind Germany as a music market."

He added: "Unless decisive action is taken in 2012, investment in music could fall again – a creative crunch that will destroy jobs and mean the next Adele may not get her chance to shine on the world stage."