David Lammy, the Intellectual Property (IP) minister, claims the government will not force internet service providers (ISPs) to clamp down on illegal file sharing.
Possible legislation was mooted last year, in response to an agreement drawn up by the British Phonographic Industry (BPI) to introduce a three-strikes' rule to persuade users sharing copyrighted music through peer-to-peer (P2P) networks.
The music industry body said it knew of thousands of UK P2P file sharers and that it could work with the ISPs to target them with written warnings, bandwidth throttling and ultimate service disconnection for continued pirate activities.
And, following support for the move in other European countries, including France, the Culture Secretary Andy Burnham last year hinted the government may use legislation to force the ISPs' hand.
But following criticism from civil liberties groups and the public, which culminated in the launch of a petition against possible legislation on the Prime Minister's website last February, Lammy reportedly told the Times today that such plans had been ruled out.
"We can't have a system where we're talking about arresting teenagers in their bedrooms," he said, adding that enforced disconnection would involve very complex legal issues.
A recent consultation by the Department for Business Enterprise and Regulatory Reform (BERR) also found no consensus existed between the music industry and ISPs on the issue.
Meanwhile the publication of the Digital Britain report by Communications minister, Lord Carter which was expected today, but is now expected later this week is widely expected to suggest alternative means for tackling the piracy problem.
Reports suggest Lord Carter will call for a "rights agency" to determine if additional charges should be paid by either ISPs or customers to the music industry in compensation for losses due to piracy claimed to be in the region of 200 million a year.
In a statement echoing the sentiments of many ISPs, BT said it was still hoping "an amicable solution" could be reached that did not resort to legislation. "It doesn't make sense to try to get people online and at the same time scare them away," it said.
