UPDATE 1-China's Internet backdown lauded by firms, activists

(Adds reaction and comment from companies and Chinese activists in paragraphs 11-13 and 22-27)

(For related stories click on [ID:nSP491468])

* Backdown likely to embolden Chinese activists

* Companies say they are seeking clarification

* Opinion divided over whether filter plan will return

By Chris Buckley

BEIJING, July 1 (Reuters) - China's ambitions to strengthen control of the Internet with filtering software became a show of the limits of its power on Wednesday, as activists and industry groups welcomed AN abrupt delay of the contentious plan.

The surprise climbdown was reported late on Tuesday by Xinhua news agency, which said the Ministry of Industry and Information Technology would "delay the mandatory installation of the controversial 'Green Dam-Youth Escort' filtering software on new computers". [ID:nSP514751]

Officials said the software was intended to stamp out Internet pornography, and computer companies had originally been told that from Wednesday they had to bundle "Green Dam" with any personal computers heading to stores for sale in the country.

But the order was assailed by opponents of censorship, industry groups and Washington officials as rash, politically intrusive, technically ineffective and commercially unfair. [ID:nN24196133]. PC companies have mostly avoided making firm public statements on the issue.

Internet professionals and activists were divided over whether the plan will drift into oblivion. But controversial efforts in past years to further control Internet blogs and bulletin boards have died quiet deaths without being officially revoked.

"This was the result of combined pressure from domestic Internet users and an array of forces at home and abroad," said Wen Yunchao, an editor at the popular Chinese website Netease (www.netease.com).

Wen said the government might eventually seek to resurrect the plan and make installation mandatory.

"But no matter what, for the Ministry of Industry and Information Technology to make this last-minute decision was a small victory for the forces of justice," said Wen.

In a statement on its website (www.miit.gov.cn), the ministry accepted the criticisms of computer companies. It gave no new deadline for installing the software but left open the possibility of the censorship scheme returning in some form.

The ruling Communist Party remains wary of the Internet, which now has about 300 million users across China.