The Motion Picture Association has emerged victorious from its latest battle to block online movie rentals, shutting down an Iranian film distribution service, Film88.

Film88 launched in April and offered users the ability to watch major Hollywood releases as video-on-demand on their PCs for only $1 (65p). The MPA argues that such unauthorised movie streaming is a blatant violation of intellectual property rights.

The MPA - whose members include major Hollywood studios such as Warner Brothers and Twentieth Century Fox - has already shut down one movie-streaming service based in Taiwan, Movie88. However the US has good ties with Taiwan and feared that a nation unwilling to cooperate with US copyright infringement charges would give free rein to pirating.

That may still be true, but Film88 was hosted on Dutch servers, and the company in the Netherlands shut the site down yesterday.

Film88 has promised to fight back and find another host. "We will be back online soonest possible. Regards, Film88," the site read today.

In February, the president of the Motion Picture Association of America - the MPA's parent organisation - testified to a congressional committee that major studios are working to offer a legal alternative to the likes of Film88 and Movie88.

Jack Valenti told the committee that the theft of American copyright is the "potential undoing of America's greatest export trade prize."

He said the studios were pushing ahead with video-on-demand services despite the current lack of a mass market because the MPA believed "that 99% of the American public are not hackers. Given the choice between a legal alternative for watching movies and stealing, I believe the vast majority will choose the legitimate alternative, but only if we do not allow lawlessness to become 'mainstream'."

The MPA estimates that piracy costs US studios more than $3bn (£2.05bn) each year, but that figure does not include losses from internet piracy.