The music industry and internet services providers (ISPs) have come to an agreement over a policy to tackle illegal downloading.

ISPs will send letters threatening letters to illegal downloaders during a three-month trial.

The measures will be put on paper by the Department for Business, Enterprise & Regulatory Reform later today.

If the letters do not curb activity, the government may impose measures to reimburse film and music companies for lost royalties.

Another possible option is filtering software that will prevent file sharing and illegal downloading.

British Phonographic Industry chief executive, Geoff Taylor, welcomed the initiative.

"This has demonstrated that ISPs and the music business can work together positively to raise awareness about illegal file-sharing," he said.

Taylor said the agreement would help to create an environment where new models of music distribution could be found.

“The music business is constantly innovating to offer new, safe and legal ways to enjoy music online, and to create a future for digital music where creativity and copyright are respected," he said.

Illegal downloading has crippled the music industry, with 2007 being the worst year for recorded music sales since records began in 1969, according to Nielsen SoundScan.

The Internet Service Providers Association noted that the current signatories to the Memorandum of Understanding are larger ISPs and urged Government and Ofcom to ensure that further discussions on the proposals are conducted in full consultation with all providers.