The Government has scuttled what has been described as a stupid law introduced by Labour.

Changes to the copyright laws could see websites being closed down after someone complained about copyright being breached. ACT's Rodney Hide said it was guilt by accusation and breached the principle of natural justice.

The industry was given until Friday to come up with a workable code of practice but has failed to do so and Prime Minister John Key says the law change will not now go ahead.