BEIJING (Reuters) - It is only a matter of time before a controversial scheme to install Internet filtering software on all computers begins in China, a state newspaper said on Thursday, after the plan was abruptly delayed this week.

The surprise climbdown was reported late on Tuesday by Xinhua news agency, which said the Ministry of Industry and Information Technology would "delay the mandatory installation of the controversial 'Green Dam-Youth Escort' filtering software on new computers."

Officials said the software was intended to stamp out Internet pornography, and computer companies had originally been told they had to bundle "Green Dam" with any personal computers heading to stores for sale in the country from Wednesday.

But the order was assailed by opponents of censorship, industry groups and Washington officials as rash, politically intrusive, technically ineffective and commercially unfair. PC companies have mostly avoided making firm public statements on the issue.

But the English-language China Daily, citing an unidentified ministry official, said the plan would eventually come to pass.

"The government will definitely carry on the directive on Green Dam. It's just a matter of time," the official was quoted as saying.

The reason for the delay was because some computer makers needed more time to include the software, it said.

"What will happen is that some PC manufacturers will have it included with their PC packages sooner than the others," he said. "But there is no definite deadline at the moment."

The ministry declined comment when contacted by Reuters.

The decision was the latest turn in a see-saw battle between the ruling Communist Party, wary of the Internet as a conduit of political dissent and objectionable values, and social and commercial forces pressing to use the Internet as a channel for more unfettered expression.

Google has also been caught in recent controversy over censorship, and the stakes for citizens and companies can be high.

China has about 300 million Internet users. About 42.6 million personal computers will be sold across the country this year, according to data research firm Gartner.

The country's largest PC brand is homegrown Lenovo, though global players such as HP, Dell and Acer have made considerable headway in the market in recent years.

(Reporting by Ben Blanchard; Editing by Ken Wills and Sugita Katyal)