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Ministers have revealed new legislation that will allow the government to take over and reform Nominet, following a boardroom battle over the .uk registry's future.

The reserve powers are included in the Digital Economy Bill, published today by Lord Mandelson's Department for Business.

"Nominet shows every sign of sorting itself out," said a senior official at a briefing on the Bill this morning.

He added that if the powers were used, officials would go into Nominet, reorganise it, and then return it to the private sector.

The legislation was prompted by an ugly spat in Nominet's senior ranks last year, which saw resignations from the board.

Some in the domain name business believed the not-for-profit firm should drop its prices to return its multimillion-pound surplus to members.

Jim Davies, a domain solicitor, was elected to the board on that platform, prompting concern from others in the business, and outsiders including the government, that Nominet might not continue to look after wider interests.

He and another board member resigned after months of accusation and counter accusation, amid personal animosity and legal threats. All parties denied any wrongdoing.

"There have been reported abuses of the domain name system in the UK, largely regarding the .uk country code Top Level Domain, such as cybersquatting, drop-catching, pressure sales of domain names, domain names used for phishing and distributing malware, and instances where foreign owned (and hosted) websiteswith a .uk domain dupe people into believing they are British," the government said today.

When told of the boardroom battles, the government demanded Nominet justify its independent status. In response it appointed an independent governance reviewer. He suggested changes to the composition of the board, which members are due to vote on in April.

Nominet chairman Bob Gilbert today said: "We believe that the reserve powers set out in the Digital Economy Bill will not be needed and that together with our membership Nominet will be able to introduce the constitutional reforms needed to allow .uk to continue to be operated responsibly and in the public interest.

"We remain committed to an industry-led model for the operation and management of this important national resource and recognise the responsibility that this implies." ®

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