BT, Sky, TalkTalk and Virgin Media will send "educational" letters to customers believed to be downloading illegally.
But a document seen by the BBC shows that rights holders are set to make do with considerably weaker measures than originally asked for.
The first letters - known as "alerts" - are expected to be sent out in 2015.
The deal has been struck with the BPI, which represents the British music industry, and the Motion Picture Association (MPA), which covers film.
The bodies had originally suggested the letters should tell repeat infringers about possible punitive measures.
They also wanted access to a database of known illegal downloaders, opening the possibility of further legal action against individuals.Continue reading the main story Analysis
They would not say it publicly, as they do not want to be seen as rocking the boat, but it is the ISPs who will be happiest with this deal.
Ecstatic, even. The contrast between what was originally put on the table - throttling internet speeds, or cutting people off altogether - and what is now coming to pass could not be more stark.
But sources close to the discussion suggest there could be a bigger game at play here. Within the leaked agreement, one important point: if this system does not have a big effect on piracy, then rights holders will call for the "rapid implementation" of the Digital Economy Act, and all the strict measures that come with it.
Steve Kuncewicz, an expert in online and internet law, agreed. He speculated that the deal "may be a Trojan horse exercise in gathering intelligence about how seriously downloaders take threats".
In other words, if it can be shown that asking nicely does not have a significant effect on curbing piracy, rights holders will for the first time have a seriously credible set of data with which to apply pressure for harder enforcement on those who simply do not want to pay for entertainment.
However, following almost four years of debate between the two sides, the final draft of the Voluntary Copyright Alert Programme (Vcap) contains neither of those key measures.Softened
Instead, letters sent to suspected infringers must be "educational" in tone, "promoting an increase in awareness" of legal downloading services.
The rights holders have agreed to pay £750,000 towards each internet service provider (ISP) to set up the system, or 75% of the total costs, whichever is smaller.
A further £75,000 (or 75% of total costs) will be paid each year to cover administration costs.
The BBC understands the UK's remaining ISPs are likely to join the agreement at a later stage.
It is expected that the deal will be finalised pending approval from the Information Commissioner's Office regarding the collection of data about which customers receive alerts.
A record of which accounts had received alerts, and how many, will be kept on file by the ISPs for up to a year.
The rights holders will receive a monthly break down of how many alerts have been sent out, but only the ISPs will know the identities of the customers involved.
A cap for the total number of alerts that can be sent out per year has also been set.
Between the four ISPS, no more than 2.5 million alerts can be sent out. As and when other ISPs join the agreement, this cap will be adjusted.
A maximum of four alerts - by either email or physical letter - can be sent to an individual customer account. Language will "escalate in severity" - but will not contain threats or talk of consequences for the accused users.
After four alerts, no further action will be taken by the ISPs.Bitter argument
When it comes to piracy, the two sides have been locked - with the government playing occasional mediator - in discussion since the controversial introduction of the Digital Economy Act in 2010.
Enacted just before the end of the last Labour government, the DEA included various measures to deal with copyrighted infringement including, but not limited to, cutting off repeat offenders from the internet.
But ISPs, and various internet rights groups, put up vocal opposition - arguing that it would force ISPs to police their users, while raising questions about whether internet access should be considered a human right.Continue reading the main story How the system will work Rights holders identify IP addresses of devices or locations they believe to be downloading files illegally. This is done through a variety of methods, including "listening in" to traffic on Bittorrent networks - a common practice A "Copyright Infringement Report", known as a CIR, will be sent to the ISP involved. It will contain the IP address as well as the date and time the alleged infringement took place The ISP will then match that report to a customer account it knows was connected to the internet from that IP address at the time of the download It will then send out an alert to that customer about the behaviour, either as an email or a physical letter Identifying users in this way is not an exact science. Sometimes, it will be unable to determine which customer account was being used at the time. Furthermore, in the alerts, no individual person will be directly accused - as a single IP address could be used by several people at a time, or even, to use one example, by someone using a neighbour's wifi without their knowledge.
Source: Voluntary Copyright Alert Programme
In response to frustration from content industries that the measures were taking too long to enforce, the Department for Culture, Media and Sport suggested that a voluntary agreement be put forward.
But as recently as September 2013, the proposals were described as "unworkable" by ISPs, and so the final draft required considerable compromise, mostly on the part of the content industry groups.
In a joint statement, the BPI and MPA said: "Content creators and ISPs, with the support of government, have been exploring the possibility of developing an awareness programme that will support the continuing growth of legal creative content services, reduce copyright infringement and create the best possible customer experience online."
The groups declined to comment specifically on the leaked document. The four ISPs involved all confirmed that they were in discussion.
In the meantime, the content creators have been successful in having more than 40 websites blocked so that users in the UK could not reach them unless using technical workarounds.
The alert system is planned to run for three years - with regular reviews on its effectiveness.
In the agreement, it states that an ineffective system would lead rights holders to call for "rapid implementation" of stronger measures as outlined in the Digital Economy Act.
On the new plans, a source close to the discussions told the BBC: "The rights holders have accepted they can't use this process to go after individuals.
"The ISPs have insisted that already established, legal routes are used in that scenario. Instead, the purpose of any campaign will be to inform and raise awareness rather than punitive action."
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