China has backed off a controversial rule mandating all computers be sold with internet filtering software, with a senior official saying Thursday the software was optional for all users.

Li Yizhong, China's industry and information technology minister, said at a press conference that the notion the Green Dam Youth Escort program would be required on every new computer was a misunderstanding.

China had issued an order requiring manufacturers to pre-install or supply the software with PCs made for sale in China by July 1.

U.S. trade officials, industry and free speech groups all made direct appeals to scrap the order, citing security and privacy concerns.

"The Green Dam mandate raises significant questions of security, privacy, system reliability, the free flow of information and user choice," said a letter delivered to Chinese Premier Wen Jiabao from 22 chambers of commerce and trade groups representing the world's major technology suppliers.

In response, China had postponed the deadline to install the software. With Li's latest comments, it appears the implementation of new rules might be suspended indefinitely. The software will be installed on all computers in schools and internet cafes, Li said, but the government would respect the rights of individuals who did not install it.

China already has the most extensive system for monitoring communications and blocking content on the internet, but Green Dam was its most intrusive tool yet, as it brings the censorship directly onto the individual's computer. China said the system is needed to block access to violent and obscene material found online.

Yet independent researchers who have tested the software found it also blocks key words deemed politically sensitive in China, such as Falun Gong.

Li said the main target of the software was pornography.