The Government is to scrap a controversial new copyright provision aimed at curbing internet piracy after industry representatives failed to agree on a code of practice.
Section 92A of the Copyright Act requires Internet Service Providers to disconnect users accused of illegally downloading copyrighted material.
The Government delayed the introduction of the provision in February after opponents claimed users would be disconnected without evidence or court scrutiny.
Prime Minister John Key says some progress was made between copyright holders and ISPs, but not enough to agree on a code.
Telstra Clear withdrew its support for the code earlier in March.
Mr Key says Commerce Minister Simon Power will now draft a replacement section.