Threatened with legislation by April if they fail to halt piracy, the UK’s six largest ISPs will today announce a plan to tackle illegal music and movie downloading by sending warning letters to thousands of customers.

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Virgin Media and BT, already began sending letters to music downloaders last month. Now Orange, Tiscali, BSkyB (NYSE: BSY) and Carphone Warehouse have joined in signing a memorandum of understanding with the government that commits them to a “significant reduction” in filesharing and to setting up their own legal music services. In other words, they get Westminster’s endorsement for pushing subscribers toward new all-you-can-eat subscription packages.

The threat of legislation will stay on the table - government’s own proposal for such action will be published today, suggesting either a levy on copying hardware, a compulsion on ISPs to filter traffic or a French-style “three-strikes-and-you’re-out” disconnection warning system. Sixty-three percent of people download music from P2P networks - an average of 53 illegal tracks per month, according to June University of Hertfordshire research for British Music Rights. But one warning from an ISP would be enough to stop 70 percent of illegal file sharers in their tracks, according to Entertainment Media Research in March.

We’ve been following this stuff closely, so read the full post at paidContent:UK and save the date for our EconMusic conference on September 23 at London’s Natural History Museum