Clause 17 of the Bill originally would have let the government make changes to copyright law to deal with new services on the web without having to seek parliament's approval. Now, lets High Court to issue an injunction against sites suspected of hosting large amounts of material that infringes copyright and effectively shutting them down.
This latest move could force sites like YouTube or YouSendIt offline. There is also a worry that any site where there is a large proportion of user-generated content will be affected, effectively shutting social networking sites like Facebook and Twitter in the UK.
The changes were proposed by Liberal Democratic members, Lord Razzall and Lord Clement-Jones and were supported by the Conservative Lords.
"I believe this is going to send a powerful message to our creative industries that we value what they do, that we want to protect what they do, that we do not believe in censoring the internet but we are responding to genuine concerns," said Lord Clement-Jones.
However Lord Young of Norwood Green, a Labour peer, later argued that the amendments would promote confusion and feels that the Bill protected copyright holders enough without it.
“Taking music as a convenient example,” he said. “I am sure that we are just as pleased to see the success of the Apple iTunes Store, for example, as we are with the Nokia Comes with Music initiative or any deal done between the record labels and ISPs. I do not think that the amendment is necessary or useful, and suggest that the existing text does the job as far as ensuring that the efforts of the copyright owners are properly considered.
“We need to be careful that we do not add what could be described as "nice to have" items-what in other circumstances is often referred to as gold-plating. With the greatest respect to the noble Lord, I think that this amendment would fall within that category.”
The Internet Service Providers' Association (ISPA), a body that represents the interests of ISPs in the UK, asked the peers"to urgently reconsider their position".
"We regret that this amendment has been hastily constructed and rushed through at report stage without due consideration of the implications or consultation with the interested parties that would be affected," ISPA said in a statement.
In December online retailer eBay, along with Facebook, Yahoo! and Google wrote to Lord Mandelson, warning against the controversial Clause 17, describing it as "stifling innovation and damaging the Government's vision for a Digital Britain".
Everyday, YouTube scans 100 years of video for copyright infringement. However with 20 hours uploaded onto the site every minute, often copyright holders feel that not enough is being done to protect their content.
Online copyright infringement is estimated to cost in the region of £400 million per year.