According to the British Phonographic Industry (BPI) sales of legal downloads actually eclipsed physical singles sales in the last week of 2004.
The best week for download sales yet, with more than 312,000 sold compared to 282,000 physical singles sold in the same time period.
The figures were collated by the Official UK Chart Company (OCC) which monitors sales in almost 6,000 stores and internet sites across the UK.
BPI chairman Peter Jamieson said: îDespite huge competition for consumer spending and the ever-present threat of piracy, music is more popular than ever with the British public. And with the publicís fast-growing appetite for downloads, the future looks bright for the single.î
U2's "Vertigo" was the top-selling UK download, boosted by a partnership with iTunes.
The top-selling single overall was the Band Aid 20 charity single "Do They Know It's Christmas".
Jamieson added:ìWe have already announced that downloads will soon be included in the Official UK Singles Chart and had downloads been included in the singles figures for 2004, the market would have shown a 4.0 % increase.ì