Lawyers are preparing to challenge the UK in the European Court after Internet service providers pulled the plug on a series of potentially controversial Web sites.
Service providers, fearful of expensive legal actions, have closed down at least three sites since an out-of-court settlement three weeks ago highlighted their vulnerability to legal action.
Demon Internet agreed to pay £200,000 to Dr Laurence Godfrey after it failed to act on Godfrey's requests to remove libellous material from one of its news groups.
The settlement has raised fears that ISPs will be left with little choice but to close down any Web site that sparks a libel complaint - irrespective of its content.
It could also force ISPs to demand indemnity funds from organisations setting up Web sites to cover the cost of potential libel actions - significantly increasing the cost of business on the Web.
Lawyer David Price plans to take the issue to the European Court for gay Web-magazine Outcast, closed last week following legal threats by gay newspaper, the Pink Paper against Outcast's ISP.
He said, "Any controversial site is going to be a target for closure. Why should an ISP take the risk of being sued for the sake of the small amount of money it makes from the site? It is vital for freedom of expression that ISPs are adequately protected."
The application to the court aims to change UK law to prevent an ISP being sued for libel, unless the person bringing the action can prove that the ISP either knew the publication was both defamatory and untrue or was recklessly indifferent.
The challenge will fill a legal gap left by the Demon case which did not address the position of an ISP when the publisher gives assurances that Internet postings are not defamatory.
The Web site for the Campaign Against Censorship of the Internet in Britain was also closed down last week, after Godfrey complained to the ISP about the campaign's coverage of his case.
"The costs of defending a potential libel action would be prohibitive, even though a defence is most likely to be successful," the ISP said.