Ofcom has launched a consultation on a code of practice designed to reduce online copyright infringement.
The draft aims to outline measures to to tackle internet piracy following the passing of the Digital Economy Act, before the General Election.
The Code of Practice will initially apply only to fixed-line ISPs with over 400,000 subscribers. This covers UK's seven largest internet access providers; BT, TalkTalk, Virgin Media, Sky, Orange, O2 and the Post Office, that together account for 96 per cent of internet connections.
Under the code, copyright owners will have to complain about alleged illegal file sharers. ISPs will then have to send three warning letters to web users suspected of illegal activity. The anonymised details of those that have received three or more notifications in a year can be request by copyright holders in a bid to start legal action.
Ofcom also said it planned to "establish an independent, robust subscriber appeals mechanism for consumers who believe they have received incorrect notifications" as well as dealing with industry disputes and distributing the cost of enforcing the code.
"The code of practice forms part of a wider set of industry activity to tackle online copyright infringement including consumer education, the promotion of lawful alternative services and targeted legal action against serious infringers," Ofcom said.
The Digital Economy Act requires the code to come into force "no later than eight months from Royal Assent, including approval from the European Commission". As a result Ofcom says it expects the code to come into force in early 2011.
The watchdog said it will keep the government informed on the effectiveness of the code.