BT, Virgin, Orange, Tiscali, BSkyB and Carphone Warehouse have agreed a plan with the music industry and the UK government to tackle online piracy.

The deal has been agreed with the British Phonographic Industry and will see hundreds of thousands of letters sent to internet users suspected of downloading material illegally.

The agreement follows a government consultation process that will look at new legislation designed to curb illegal file-sharing.

The announcement also comes ahead of a report by the Department for Business, Enterprise and Regulatory Reform, which has been looking at possible punishments for ISPs that fail to stop users trading copyrighted material.

Martin Warner, co-founder of Technology of Tomorrow 08, hailed the deal as a "major breakthrough" for consumers and the record industry.

"However, many challenges still remain on how this is going to work out in practice and be policed," he said.

Warner explained that rapid advances in technology have had a major impact on how music is consumed.

"This has presented many opportunities and challenges for artists and record companies, but the consensus is that there is no alternative but to embrace new technology," he said.