A new type of cyber-squatting which allows opportunists to occupy web addresses without paying for them is creating havoc for internet chiefs.

Domain name ‘kiting’ – or tasting, as it is sometimes known – involves registering a web address and then cancelling it just before the registration fee becomes due. Kiters then re-register the address minutes later, in effect creating a continuous registration.

The practice allows people to register numerous names in the hope that some will prove popular. Those that fail to attract visitors are allowed to lapse, but popular addresses will be used to sell advertising

As many as five million domain names are registered each year by domain name kiters, according to the Internet Corporation for Assigned Names and Numbers (ICANN), which assigns web addresses.

Internet registries, which oversee new registrations, estimate that replacing computer systems to cope with the increased volume of transactions could cost hundreds of thousands of pounds.

"This market has grown very rapidly in the past couple of months," Paul Twomey, ICANN’s chief executive, said. "Investors have now moved in, attempting to tap into the significant revenues that can be generated by companies such as Google, which places ads on popular sites."

Speaking from ICANN’s annual meeting in Sao Paulo, Brazil, Mr Twomey said that of the five million names that were put forward each year, only 1 per cent were registered in earnest.

The secondary market for domain names, which incorporates both the sale of popular names and the advertising revenues they bring in, is thought to be worth several billion dollars worldwide.

One of the growth areas, Mr Twomey said, was the registration of terms which would typically be put into a search engine, but were now increasingly being typed by users into the URL line itself.

"A kiter might for instance register ‘www.adelaidecrickettestscores.com’ with a view to catching people who want to find out the result of the recent Ashes test," he said. "These people are incredibly sophisticated followers of people’s behaviour on the internet."

Internet registries said that constantly having to register and cancel millions of names on a regular basis was a great burden on their systems.

"Somebody has to support all these transactions," Jonathan Robinson, chief operating officer of NetNames, a domain name management company, said. "They require vast banks of servers, and the processing costs either have to come out of the registry’s profits or be passed on to the industry."

As many as 15 per cent of new registrations for .com and .net are thought to be used for so-called "pay-per-click" sites - websites which have no content of their own and exist purely to support advertising.

ICANN has ruled out introducing a five-cent fee for initial applications, in an attempt to deter kiters.

ICANN is also facing pressure from Arab countries and those which use the Cyrillic alphabet to adapt internet naming conventions to incorporate scripts other than the Roman alphabet. The company said it hoped that a technical solution could be reached by the end of next year.

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