Internet New Zealand has welcomed a new bill changing copyright laws but says the penalty of suspending a user's account for breaches won't work.

On Tuesday, Commerce Minister Simon Power introduced a bill repealing Section 92A of the Copyright Act.

The Copyright (Infringing File Sharing) Amendment Bill replaced the section with a three strikes regime intended to to deter illegal file sharing.

The previous government's attempt to police copyright infringement was withdrawn after many internet user groups complained it was too draconian and would result in people being unfairly cut off by their internet service providers (ISPs).

Now there will be the three warning system after which offenders will face tough penalties or suspension.

Announcing the bill, Mr Power said the three notices would educate users about illegal file sharing and it provided effective methods for copyright owners to enforce their copyright.

"It ensures that file sharers are given adequate warnings that unauthorised sharing of copyright works is illegal."

The bill extended the jurisdiction of the Copyright Tribunal, enabling it to hear complaints and award penalties of up to $15,000 based on the amount of damage sustained by the copyright owner.

Mr Power said the bill would enable copyright owners to seek the suspension of internet accounts through the District Court for up to six months.

"It's important that account holders are given a reasonable time to stop infringing before enforcement takes place. The bill prescribes timeframes so account holders have the opportunity to address illegal file sharing activity occurring on their internet connection before enforcement action is taken."

Users would have the chance to challenge notices and may request hearings at the Copyright Tribunal to contest infringement claims.

Regulations outlining awards the tribunal may make would be drafted after the bill passed.

"Online copyright infringement is a problem for everyone, but especially for the creative industry, which has experienced significant declines in revenue as file sharing has become more prevalent," Mr Power said.

Internet NZ said the bill was good but said suspending people's internet accounts would not work.

"Internet users would simply start a new account at another ISP. While suspension would require an order of the District Court, it is still unworkable and unnecessary. InternetNZ will argue strongly that suspension be deleted by the Select Committee," the organisation's policy director Jordan Carter said.

He said definitions in the bill needed to be clear and workable.

"Overall, the draft Bill puts the mistakes of the original Section 92A behind us, and allows for a workable regime that will reduce copyright infringement in New Zealand," Mr Carter said.