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A legal challenge to the Digital Economy Act has failed get the controversial legislation overturned.

The judicial review, requested by BT and Talk Talk, rejected claims that Parliament had overstepped its powers with anti-piracy measures.

However, Mr Justice Kenneth Parker upheld one of the objections, relating to who pays for the law's enforcement.

Today's ruling was welcomed by copyright holders who said that it would help reduce illegal file sharing.

The act, which was rushed through Parliament before the 2010 general election, obliges internet service providers (ISPs) to co-operate with rights holders in identifying computer users who may have downloaded music, software or videos illegally.

BT and Talk Talk mounted a legal challenge in the High Court, claiming the legislation violated several European laws on commerce and privacy.

Justice Parker rejected four of the five points put forward by the ISPs but ruled in their favour regarding a piece of associated legislation that makes service providers liable for 25% of the cost of policing their users.

The government will now be forced to re-examine the draft costs sharing order, however it is unlikely that will significantly delay the implementation of the Digital Economy Act.

In a statement, BT expressed its disappointment with the ruling.

"Protecting our customers is our number one priority and we will consider our options once we have fully understood the implications for our customers and businesses.

"This was always about seeking clarity on certain points of law and we have to consider whether this judgment achieves these aims," said a BT spokesperson.

The government said that it was "pleased" with the High Court's decision and that it would set out the next steps for implementing the law shortly.

Prior to the Digital Economy Act, content producers, such as record companies and film studios, had argued that the UK needed legislation to help them pursue illegal file sharers.

What they eventually secured was a law that compels ISPs to write to their customers at the rights holders' behest, warning them to cease their behaviour.

If the the customer does not comply, their ISP may eventually be asked to limit the user's internet access or, in extreme cases, make their personal details available so legal action can be taken.

Opponents of the Digital Economy Act claimed that it allowed for severe sanctions against computer users, based on little more than the word of a large corporation.

They pointed out that the act also failed to clearly define a route of appeal for those users targeted.

Rights holders argued that rather than contesting the law, companies like BT and TalkTalk ought to have worked with them to try to iron out these problems.

One such group, the British Phonographic Institute (BPI) which represents record companies, welcomed Wednesday's ruling.

BPI chief executive Geoff Taylor said: "This judgement gives the green light for action to tackle illegal downloading in the UK.

"It confirms that the DEA is proportionate and consistent with European Law.

"Shareholders and customers of BT and TalkTalk might ask why so much time and money has been spent challenging an act of Parliament to help reduce the illegal traffic on their networks."