By Kate Holton

LONDON (Reuters) - Britain's music and film industries launched a fight back against online piracy on Thursday, persuading the six biggest Internet providers to send warning letters to those suspected of illegal file-sharing.

Some 6 million Britons are thought to engage in illegal file-sharing each year and the trend has cost the music and film industries millions in lost revenue.

ISPs had previously argued they were mere conduits and not responsible for content. But they agreed to the deal after the British government said it would impose legislation if they did not work to curb illegal file-sharing.

Analysts said the plan would likely scare off younger users of illegal sites, who download content often without their parent's knowledge, but would need to be just the first step in an escalating battle.

"You could quite easily wipe off a million people from illegal file sharing sites in the UK, and if that is achieved, then that would be one of the largest single successes ever against file sharing," Jupiter analyst Mark Mulligan told Reuters.

"But that will not be enough."

The plan follows moves by France to engage Internet service providers in tackling copyright infringement on their networks and as countries such as Australia, Denmark, Japan and New Zealand launch similar discussions.

SIGNIFICANT STEP

Under the deal drawn up by the government, Virgin Media <VMED.O>, BSkyB <BSY.L>, Carphone Warehouse <CPW.L>, BT <BT.L>, Orange <FTE.PA> and Tiscali <TIS.MI> have agreed to work towards a "significant reduction" in the illegal sharing of content.

They will send letters to prolific illegal downloaders each week under a three-month trial, warning them that they are being monitored.

The ISPs and rights holders will then work together with the media regulator Ofcom to come up with a Code of Practice on how to act if this does not work.

Options could include a three-strikes-and-you're-out warning, traffic shaping to slow access for those who are either illegally uploading or downloading, or filtering to prevent illegal tracks from being downloaded.

The content industries will also work to educate consumers about illegal downloading and further develop a range of legal services in addition to their previous approach of suing those who engaged in illegally downloading files.

"The UK agreement is a big step towards reaching a solution to online piracy, and it shows that the process of engaging ISPs that was set in motion in France last year is gathering real momentum internationally," said John Kennedy, the head of the IFPI body which oversees the music industry.

The UK Film Council also welcomed the announcement as a significant first step.

Music companies have been trying desperately to boost digital sales in recent years following the growth of Internet piracy which has cut into CD sales.

A host of downloading services have developed on the Internet in recent years, with the most successful being Apple's <AAPL.O> iTunes with over 70 percent of the digital music market. But the government has said it would still like to see more choice.

BSkyB announced a subscription music service just this week and other ISPs are also working on new downloading services.

(Editing by Louise Ireland/Elaine Hardcastle)