Business Secretary Lord Mandelson is calling for tougher penalties for illegal downloaders, including fining the parents of children caught illegally file swapping.
Mandelson is thought to have been instrumental in proposals set out in a consultation document that will form the basis of the Digital Economy Bill and run alongside the Digital Britain schemes.
The document calls for Ofcom to track and warn the owners of computers being used in illegal downloading activities. Those that continue to offend would have their internet access slowed or blocked, while some could face fines of up to £50,000.
The Department for Business, Innovation and Skills admitted the paper had been published in a bid to address concerns that the Digital Britain proposals would not help eradicate online piracy.
However, Mandelson may face competition from Pirate Party - a political party that hopes to legalise non-commercial file sharing. The party has already won a seat in Sweden, and hopes to gain supporters in the UK.