The prosecution has dropped half the charges against four men accused of helping millions of internet users make illegal downloads of music, films and games.

On the second day of the Pirate Bay trial in Stockholm, in which Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde Kolmisoppi and Carl Lundström face up to two years in prison and a 1.2 million kronor (£100,000) fine for facilitating the distribution of copyrighted material, the Swedish prosecutor has decided not to proceed with charges relating to copying files on their website.

The four men who run the site are now only charged with making films or music protected by intellectual copyright laws accessible to the public, prosecutor Haakan Roswall said.

Defence lawyer Per E. Samuelsson said: "It's as if half the prosecution has gone up in smoke." He called the decision "sensational".

The website TorrentFreak reported that the prosecutor failed to explain adequately the technology behind the site and could not prove that it hosted copies of the copyrighted material.

"This is not surprising, at least for those who follow the matter. We knew that The Pirate Bay wasn't making any copies directly," Sanna Wolk, a doctor in law and researcher at Stockholm University, told AFP.

The defendants say they have done nothing illegal because The Pirate Bay does not host copyrighted material. Instead, it directs users to find other file sharers. The Pirate Bay site, based in Sweden, has an estimated 25 million active users worldwide. Using a search engine and an internet protocol called BitTorrent, which enables the transfer of large files, the site contains information needed to download film or music files from others who have often copied them without permission.

Three of the defendants administer the site, while Lundstrom helped finance it. They are also facing 120 million kronor ($14.3 million) in claims for compensation and damages from music and movie companies including Warner, MGM Pictures, Colombia Pictures, 20th Century Fox, Sony BMG, Universal and EMI.

The case focuses on dozens of works the prosecutor claims were downloaded illegally, including music by the Beatles, Robbie Williams and Coldplay, and movies such as Harry Potter and the Goblet of Fire and season one of the TV show Prison Break.

The case stems from May, 2006, when police raided 10 locations in central Sweden, seizing servers and computer equipment and temporarily shutting down the site.

Pirate Bay has been in the sights of the music and film industries for several years as concern has grown over the level of illegal file sharing. The defendants have run the site since 2004. It was set up a year earlier by the Swedish anticopyright organisation Piratbyrån.

Peter Danowsky, legal counsel for the music companies in the case, said the change in charges would simplify the case against The Pirate Bay.

He said: "It's a largely technical issue that changes nothing in terms of our compensation claims and has no bearing whatsoever on the main case against The Pirate Bay. In fact, it simplifies the prosecutor's case by allowing him to focus on the main issue, which is the making available of copyrighted works."

The trial is likely to last about three weeks.

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