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Denying allegations that it had bowed to pressure from the French government, the Commission said simply that it needed more time to consider the issues involved.

The Copyright Levies Reform Alliance, which represents device makers and sections of the music industry, said that it was furious at the last minute postponement and published a letter sent last month by the French prime minister Dominique de Villepin which urged Commission president José Manuel Barroso to delay reform.

CLRA spokesman Mark MacGann said that the 'capitulation' to France is bad news for European consumers.

'With this decision, it is clear to industry that the Commission has abandoned any serious efforts to establish transparency, efficiency and fairness in the way these levies are set, collected and distributed, let alone its publicly stated ambition to promote better regulation,' he said.

Twenty-two of the EU's 25 member states collect levies which are then distributed as compensation for supposed losses in income as a result of file sharing - only the UK, Ireland and Cyprus are levy-free.

The CLRA argues that the levies unfairly raise the cost of portable devices and conflict with EU copyright law, by charging a consumer twice for legally purchased music. It is also concerned about the uneven amount of the levies, which add €2 to the price of a 30GB iPod in Finland but €90 in Spain, which make it impossible for device manufacturers to sell their goods at a consistent price. Levies also make devices significantly more expensive than elsewhere in the world, particularly the US, it argues, adding that they are outdated in an age of digital

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copyright controls such as DRM. Supporters of levies argued that these only cover a minority of sales and are lost as soon as a track is burnt to a CD.

An early draft of the Commission's proposals suggested that the EU was prepared to outlaw levies on a number of goods, including those that employ DRM technology and those that are generally not used for copying, such as mobile phones.

The CLRA is also concerned that absence of clear rules will deter technology companies from introducing new technologies. Proposed levies on Blu-ray and HD DVD discs - despite the unprecedented amount of DRM controls built into both optical disc formats - is delaying their introduction.

'The financial impact on certain manufacturers is too great,' MacGann said. 'They prefer not to enter certain markets.'

Veronique Desbrosses of GESAC, a European group of authors and composers that backs levies, said that they only make up a small part of the overall price of devices and provide artists with a valuable income.

'It's fair for rights holders to receive a small amount of money for this copying,' she said.

She rejected the suggestion that levies charge people twice for legitimately purchased music, repeating the allegation - made most recently by Universal Music CEO Doug Morris - that most iPods are filled with copied music, not paid-for downloads. Which is true as long as you believe that a CD ripped from your own collection is illegitimately copied music, as sections of the industry is wont to do.

The UK Government's Gowers Review of Intellectual Property, which published its report last week, found that levies are not necessary to ensure that artists get the 'fair compensation' that they are entitled to under EU's Copyright Directive.

'The Review believes it is possible to create a very limited private copying exception without a copyright levy,' the report found. If rightholders know in advance of a sale of a particular work that limited copying of that work can take place, the economic cost of the right to copy can be included in the sale price.'