Lord Mandelson will be given additional powers to cut off the internet connection of people who persistently download and share copyrighted material under a new plan to curb piracy.

Disconnecting the worst offenders had been ruled out under the original proposals drawn up by the former communications minister, Lord Carter, just two months ago. However, a streamlined version of the laws, published today, would see Lord Mandelson handed powers to overrule Ofcom, the industry regulator, and take into account “wider factors” to cut off offenders. The changes have raised concerns that the Business Secretary has thrown out Lord Carter’s report in order to expand his Whitehall empire.

The tougher measures were drawn up just days after Lord Mandelson met with a leading opponent of illegal downloading, David Geffen, the co-founder of the DreamWorks film studio. The pair met while on holiday in Corfu earlier this month. One industry source told the Independent that the new proposals represented a “significant change” that appeared to stem from Lord Mandelson’s personal intervention. “This is Government by Peter’s friends,” the source said.

A spokeswoman for the Department for Business, Innovation and Skills (BIS) denied he had been influenced by his meeting with Mr Geffen. “Work has been ongoing on these issues for a matter of weeks,” a spokeswoman said. “Lord Mandelson does not believe Digital Britain is even on David Geffen’s radar. There was no discussion on this with Geffen.”

She also denied that Lord Mandelson had dispensed with the Digital Britain report. “We are simply adding new ideas to the table that could potentially make the whole system more flexible and provide a quicker way to bring in technical measures,” she said, adding that the power to cut a household off from the internet would be used as “very much a last resort”.

Lord Carter's Digital Britain report recommended that Ofcom be given until 2012 to work out a series of technical measures designed to catch persistent pirates. Stephen Timms, who was made the Digital Britain minister last month, said the proposals had been introduced as it had “become clear there are widespread concerns that the plans as they stand could delay action, impacting unfairly upon rights holders”.

As many as seven million people download music or films using illegal sites and file-sharing programs, leading some critics to argue that Lord Mandelson’s determination to stamp it out was unworkable. Larry Whitty, chairman of Consumer Focus, said the powers were disproportionate and urged the Government to give consumers the right to appeal against action taken against them. “The Government originally proposed to tackle illegal file sharing by sending warning letters and taking court action before technical measures can be imposed,” he said. “This approach would be fairer, more proportionate and better respect consumer rights.” Andrew Robinson, leader of the newly-formed Pirate Party UK, said that the Government’s “draconian” approach would drive people away from non-profit making file sharing and towards counterfeit DVDs.

Internet service providers (ISPs) reacted angrily to the suggestion that they would have to regulate the use of the internet under the shake-up. They will have to take early action against offenders, such as blocking them from certain sites, cutting down their internet connection speed and temporarily suspending their account.

A spokesman for TalkTalk said the company would “strongly resist” attempts to turn ISPs into the internet police and criticised Lord Mandelson’s planned new powers. “Introducing measures such as disconnection at the instigation of the Secretary of State will sidestep proper scrutiny, likely breach fundamental human rights and result in innocent people being disconnected or, worse, prosecuted,” he said. The industry has now been given until 29 September to respond to the new file-sharing proposals.