Internet pirates who offend repeatedly will face a series of sanctions that could end with being disconnected, Lord Mandelson said yesterday.

The Business Secretary said that he would introduce a Bill that legislated for disconnection next month.

Carphone Warehouse, the owner of Talk Talk and Britain’s largest internet service provider, reacted by saying that it would mount a legal challenge on the basis that internet access was a human right.

Lord Mandelson told an audience of senior executives from Britain’s creative industries that internet piracy was “not a victimless act” but “a genuine threat to creative industries” which needed to be urgently addressed.

Promising that disconnection — or “account suspension” in Lord Mandelson’s phrasing — would be only a “last resort”, the minister insisted that the cut-off penalty was necessary because “it must become clear that the days of consequence-free widespread online infringement are over”.

Andrew Heaney, Carphone Warehouse’s director of strategy, said that his company was worried about “conveyor-belt justice” in which a family could face the threat of losing their broadband because of infringements by a neighbour hijacking their connection or because teenage children were stealing music online without their parents knowing.

“We can’t let the Government ride roughshod over human rights,” Mr Heaney said. “We will either try to challenge this in court if it passes through Parliament, or wait until we are asked to cut somebody off, at which point we will refuse to do it.”

Lord Mandelson dismissed those objections. He said that the idea of cutting people off was not new because people often lost their connections if they failed to pay their bills. “When a mistake was made over the payment of my own broadband, because of a confusion arising in my direct debit payments, my account was suspended,” he said.

BT complained that the scheme could “force up broadband prices for customers” by an estimated £2 a month. But Virgin Media said that Lord Mandelson’s scheme “looked like a broadly balanced approach”.

Lord Mandelson outlined a two-stage plan to tackle online piracy, after pointing out that “only one of every twenty tracks downloaded in the UK is downloaded legally”. In phase 1, starting next spring if the Bill passes through Parliament, those caught would be sent warning letters from their internet providers, and have their details passed to music and other companies, which would have the option of suing that person.

Phase 2 would begin a year later, if the letter writing and legal campaign failed to reduce piracy by 70 per cent. The Business Secretary would then have the option of introducing a range of further “technical measures” including “temporary internet suspension”.

Jeremy Hunt, the Shadow Culture Secretary, would not commit his party either for or against internet disconnection yesterday. Instead he said: “We seem to have a new policy on file sharing every time a government minister opens their mouth,” he said. “In August, Lord Mandelson argued that waiting for 12 months before anything happened would be ‘too long’. Now they propose waiting 15 months. What’s changed?”

Mr Hunt said that he would rely on a panel of expert advisers, whose members include Charles Dunstone, the founder of Carphone Warehouse, and Lucian Grainge, the chairman of Universal Music, who has lobbied vigorously for serial pirates to be cut off.

In an attempt to head off the critics, Lord Mandelson published a series of letters from supporters, such as Sir Elton John, Noel Gallagher and James Blunt, although none of the three stars explicitly supported the disconnection proposal.

The former Oasis member, Gallagher, wrote: “I would support making ISPs play a bigger role in controlling illegal file-sharing, as long as any actions taken are considered, proportionate and the music community has a say in how they are put in place.”

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