Registration of new web addresses has dropped off because of a shortage of names, according to the head of one of Britain's biggest resellers of domain names.

"People setting up a new business are as likely to buy up and old name that is not being used as register a new one. It is very hard to find one that is not already in use," said Ditlev Bredahl, Danish chief executive of UK2.net.

"I'd guess that 80 percent of the words in the dictionary have already been used. That's why people are coming up with names like Skype and Joost."

Bredahl reckoned that at peak in the year 2000 UK2 sold 38 percent of the .co.uk names in Britain, acting as a sales channel for the domain registrar Nominet. "We could offer the cheapest prices because UK2 had automated the whole process."

A combination of fewer new registrations and stiffer competition forced UK2 to rethink its business. In what Bredahl described as major turnaround it invested in servers, with a infrastructure and staff to support them, and began to host ecommerce and other web servers.

By 2005 domain registration accounted for just 46 percent of its business; now the proportion is closer to 30 percent, though the number of registrations has risen.

UK2 offers "turnkey" ecommerce hosting including stock management and payment facilities using Paypal or Google Checkout from £9.95 a month. "We've have got it to the point where virtually all you need to do is upload your product details," he claimed.

A lot of new sites are started by people who are running a business over eBay and want to try setting up on their own.