A controversial copyright law covering the internet will be delayed to see if the sector can make it workable, Prime Minister John Key said today.

The online community has been up in arms in recent weeks as the law is due to come into effect on Saturday.

Protesters say Section 92A of the Copyright Amendment Act could force the closure of any internet account following any accusation of breach of copyright, even if it was not proven.

A large number of websites and blogs blacked out their sites this morning to raise awareness about the issue.

Mr Key told journalists that Cabinet had discussed the issue today and decided to delay the implementation for one month until March 27.

It was hoped that the sector could agree by then on a workable code of practice to implement the law which was intended to prevent copyright abuse on the internet.

If no agreement was reached then the section would be suspended, Mr Key said.

If a code was agreed to, there would be a review after six months to see if the law was working as it was intended.

"Obviously our preference is for the parties to reach a compromise agreement with each other and hopefully the law will work properly," Mr Key said.

"If it doesn't we will change it."

Mr Key said he was advised that the various parties were close to agreement.

The new law was passed by the then Labour government last year. The clause which has sparked protests was removed by a select committee but then restored by the minister responsible for the bill, Judith Tizard, when it returned to the House.

Those promoting the clause say it will effectively police widespread copyright abuse on the internet.

Both National and Labour backed the law, but since then many MPs have had a change of heart.

In response to criticism, Commerce Minister Simon Power last week said a code of practice being developed by the internet community would help implement the law.

Mr Key said both sides of the debate had a point.

The Government would not allow the internet to be the "wild west" where any copyright holders did not have entitlement to compensation or recognition of their work.

However, its interactive nature led to different issues from the traditional media, Mr Key said.

New Zealand's international commitments and potential trade deals all needed to be backed up by copyright rules.

Mr Key has been advised that it was not possible to codify in law how copyright protection would work in practice and implementation of copyright law was best organised through a code of practice.

internet NZ executive director Keith Davidson welcomed the decision saying the need to delay the unworkable section had been clear for some time.

"Section 92A still needs to be fully repealed. It is disproportionate and unfit for purpose. But this deferral is a good start," Mr Davidson said.

-NZPA