A proposed Italian law has roiled Web companies and civil liberties groups as the country moves closer to Internet censorship.

The draft would make Internet Service Providers (ISPs) responsible for monitoring content on their networks, alongside major sites such as Google's YouTube.

Paolo Romani, Italy's vice minister for communications, said the decree simply updates regulations mandated by a 2007 European Union directive.

But the move has incensed media observers and opposition.

Former communications minister Paolo Gentiloni, an opposition politician, called it a real scandal, peppered with gifts to Mediaset, the television group owned by current Prime Minister Silvio Berlusconi, by hobbling suppliers of alternative entertainment at a time when Mediaset's audiences are shrinking.

The regulations, due to go into effect Feb.5, would make Internet sites as liable as television stations for their content and subject to hefty fines by the AGCOM media watchdog.

If this happens it would sweep away Internet 2.0, Nuti said. It would transform Internet platforms into judges or tribunals.

The draft has also raised criticism from freedom of speech groups like Italy's Article 21, which said the decree deviously attacks the freedom to operate on the Web and would block any possibility of modern development of the country.

Italy has one of the lowest rates of ADSL Internet usage in western Europe, according to the European Commission's 2009 Information Society Report.

The law arrives as Google is fighting its own legal case against company Mediaset, owned by Berlusconi.

Mediaset is claiming 500 million Euros in damages from YouTube after the site hosted a video showing the bullying of a teenager with Down's syndrome.

Civil liberties group Article 21 claims the new law would block any possibility of development in a country which already has one of the lowest rates of ADSL usage in Western Europe.

The European Commission might also become involved, possibly opening an investigation to see whether the new decree infringes EU norms.