New Zealand Monday withdrew a controversial law which could have forced firms to disconnect Internet users accused of illegal use of material such as music or films.
The Copyright Amendment Act would have put the onus on Internet service providers to ban users accused of copyright breaches, even if allegations were unproven.
"Section 92a is not going to come into force as originally written. We have now asked the minister of commerce to start work on a replacement section," Prime Minister John Key told reporters.
The new law was due to come into effect in late February but it was postponed for a month following widespread protests from Internet users.
The delay was meant to give time for Internet service providers to come up with a code of conduct to make the law workable.
"There is a need for legislation in this area. Some progress was made between copyright holders and the ISPs but not enough to agree a code of conduct," Key said.
"In our view there are a number of issues that made it difficult to complete that code of conduct without fixing the fundamental flaws in section 92a."
The government will re-introduce a new law following a review.
Key has previously said the government would not allow the Internet to become the "Wild West," where copyright holders had no right to payment or recognition for their work.
(c) 2009 AFP
Explore further: Briefs: Japan debates on Internet TV patent law