The government has dumped plans to force ISPs to block websites that host pirated material.

The proposal was one of many designed to combat net piracy that featured in the Digital Economy Act, which was made law last year. However, following a review by regulator Ofcom, the government confirmed the proposal is to be canned.

At the end of last month the Motion Picture Association started legal action against BT in a bid to force the ISP to block access to Newzbin 2, members-only site that offers links to other locations on the web where music. The decision which was upheld by the courts leading many to suggest the proposal in the Digital Economy Act is not necessary.

Business secretary Vince Cable told the BBC: "We've discovered that the drafting of the original laws, which took place a year or so ago, were not tight".

"There are test cases being fought in the courts, so we're looking at other ways of achieving the same objective, the blocking objective to protect intellectual property in those cases, but in a way that's legally sound.

The Business Secretary also revealed 'format shifting' or making digital copies of CDs that can be transferred to a computer or digital music player for personal use is to be legalised.

Professor Ian Hargreaves first recommended ripping CDs for non-commercial use should be legalised in May this year  when his report on current legislation and its place in the digital age, which was announced by Prime Minister David Cameron at the end of last year, was published. At present, transferring a digital copy of a CD to another device, such as an MP3 Player, is currently illegal under existing copyright law.

"We are talking about big changes," Cable said.

"Bringing the laws more up-to-date to have a proper balance which allows consumers and businesses to operate more freely, but at the same time protect genuinely creative artists and penalise pirates."

Cable also said the economy would be £8bn better of by updating the existing law. However, the changes will not make it legal to share the digital copies online with other web users.

The government has also agreed to the report's calls to relax the law covering parodies, as currently many content creators such as comedians are deterred for creating songs and videos that are caricatures of existing work. Instead, the change will ensure UK law is similar laws to the US which will mean permission isn't required from content creators.