Software piracy fell in the UK by two per cent last year, according to IDC's global software piracy study.

The report found that UK firms are the third most law abiding in Europe, after Austria and Sweden. But, while piracy rates have gone down, the value of the pirated software has gone up to $33bn.

"The decline in piracy is good news on one level," said Mike Newton, a spokesman for the Business Software Alliance (BSA), which funded the study.

"More disturbing was the rise in the value of goods stolen at market. This has been turbocharged by the dollar exchange rate's effect on software prices."

Newton added that, while piracy rates are falling, there is still a long way to go. He cited piracy rates in China, for example, where only 10 per cent of the software used is legitimate.

The BSA, an intellectual property pressure group founded by the major software and hardware vendors, is also calling on Tony Blair to use his presidency of the G8 summit later this year to push for better control on piracy.

The organisation also wants the prime minister to honour a manifesto commitment to "modernise copyright and other forms of protection of intellectual property rights so that they are appropriate for the digital age".

"We are asking Tony Blair to stand by that pledge and convert it into action," said Newton.

"He would be helping himself as well; if piracy rates went down to 17 per cent in next few years it would mean an additional £1.5bn in tax revenue."

Newton confirmed that the BSA will continue with its controversial software audit programme, although it accepted the need to moderate the language used.