A UK internet service provider has settled a libel case in a move which could have wide-ranging implications for online publishers.

Laurence Godfrey will be paid £15,000 plus legal costs - which could top £200,000 - by Demon Internet after allegedly defamatory postings about him appeared in newsgroups.

Demon had previously said the case would affect the entire ethos of free speech on the internet.

Dr Godfrey alleged that the company failed to remove defamatory material from a newsgroup it hosted, in the first case of its kind to go before the English courts.

He said after the case: "I am happy with the settlement.

"I don't think there is a right, in fact I'm quite sure there's no right, to libel other people on the internet, to concoct fabricated allegations and try to destroy people's reputations."

Dr Godfrey said his argument had been vindicated and he now hoped ISPs would act responsibly if anyone else found themselves in a similar situation.

Although such discussion forums are often full of robust, forthright and even offensive opinions posted by individuals, the case hinged on whether Demon could be treated as publisher of the material.

The case will affect other ISPs - all of which host newsgroups - who fear they could become liable for offensive material which millions of their users might write.

If the ISPs become more cautious over what material they allow to be published - by screening submissions or suspending websites - they could inflame the debate over freedom of expression or damage internet-based businesses.

Reasonable care

Under English law ISPs are not held to have been the publishers of defamatory material providing they satisfy two criteria.

They must prove they took reasonable care to ensure such material was not published, and once alerted to a problem, took steps to resolve it.

Dr Godfrey's action against Demon related to a message posted in 1997 on soc.culture.thai, purportedly coming from him and containing damaging allegations of a personal nature.

He said he asked Demon to remove the message but the ISP refused. The message was copied to its servers around the world and many others containing newsgroup messages.

In a statement, Thus, Demon Internet's parent company, said: "Concluding this matter in a reasonable way is in the best interests of the company and its customers.

"Thus remains convinced that the law has not kept pace with the development of the internet and will work with our colleagues in the industry to lobby for modernisation of the law.

"Thus will press the government for recognition that ISPs should not be liable for the millions of items carried on the internet every day."