France's highest court has inflicted an embarrassing blow to President Sarkozy by cutting the heart out of a law that was supposed to put France in the forefront of the fight against piracy on the internet.

The Constitutional Council declared access to the internet to be a basic human right, directly opposing the key points of Mr Sarkozy's law, passed in April, which created the first internet police agency in the democratic world.

The strongly-worded decision means that Mr Sarkozy's scheme has backfired and inadvertently boosted those who defend the free-for-all culture of the web.

Mr Sarkozy and Christine Albanel, his Culture Minister, forced the law through parliament despite misgivings from many of the President's centre-right MPs. It was rejected in its first passage through Parliament.

The law innovated by creating an agency, known by its initials HADOPI, which would track abusers and cut off net access automatically to those who continued to download illicitly after two warnings.

The law was supported by the industry and many artists. They saw it as a model for the USA and Europe in the fight to keep earning a living from their music and film. Net libertarians saw it as the creation of a sinister Big Brother. Many called it technically unworkable. Some artists saw it as hostile to the young consumers who are their main customers.

The Socialist opposition appealed to the council on the grounds that the constitution was breached by the creation of an extra-judicial agency with powers to punish internet offenders.

The council, which includes two former presidents and is usually seen as elderly and out-of-touch, gave the Left more than it was hoping for.

Les sages – the wise men – as the council is known, took the teeth out of the law. They ruled that "free access to public communication services online" is a right laid down in the Declaration of Human Rights, which is in the preamble to the French constitution. It also said the law breached privacy by enabling the HADOPI agency to track people's internet activity.

It agreed that the law reached the separation of powers because if gave an administrative authority power to impose justice. And to boot, it violated the presumption of innocence because alleged pirates would be cut off without being able to defend themselves, the council said.

The Government insisted today that the HADOPI law would still be put into force, without its censured sections. Ms Albanel, whose job is now on the line, said that the agency would still send warnings to abusers although it was not clear how it would track them. It would then be up to prosecutors and the courts to take action, she said.

That situation already exists and does not work in France and most other countries. Courts do not have time to haul in the millions of ordinary users who pilfer copyright material online.

While bloggers and internet users cheered the council decision, announced last night, the affair has left a bad taste in the entertainment world. Young musicians opposed the law as a weapon designed to protect the big recording companies.

Old-school leftists like Juliette Greco, the grande dame of Left Bank song in the 1950s, strongly supported the crackdown and reproached the Socialists for betraying artists with their opposition to the law.

Patrick Bruel, a middle-aged popular singer with leftwing views, railed against the council decision this morning. Downloading a song free is like walking out of the bakers' with a baguette and refusing to pay for it, he said.

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