Netflix is preparing to crack down on the 'millions' of account holders who it says are still sharing passwords.

The streaming service first revealed in October that it was exploring how it could put a stop to multiple people piggybacking off one account with plans to charge viewers who were caught sharing a package with people they don't live with.

And in a letter released to shareholders this week the American-based company has confirmed that a wider roll-out of its 'paid-sharing' scheme is now firmly on the horizon.

While sharing passwords has always been prohibited by Netflix the company has never introduced a system to enforce the rules globally. But with an estimated 100 million households, it suggests, sharing accounts to save cash the company says the issue is undermining its 'long term ability to invest in and improve Netflix as well as build our business'.

The announcement confirms that Netflix is planning to roll-out a paid-sharing scheme 'more broadly' as soon as the end of March.

Under the much-anticipated new rules, which are currently being trialled in South America, people who have been detected as watching Netflix using someone else's username and password are expected to be stopped from logging-in before being prompted to create their own account and payment details in order to continue watching.

In some countries there will be the option to upgrade a package to include a sub-account - to give access to someone living outside of the account holder's home - while other special features such as allowing those who have been sharing to migrate their profile and stored shows into a new account may also be available.

Exactly how Netflix intends to enforce the new payment structure and detect viewers breaching the guidance is unclear but current information on its website says the company uses details such as IP addresses, device IDs, and account activity from devices signed into the Netflix account to spot those in breach alongside adopting device verification to confirm exactly who is logging in.

The statement adds: "We've worked hard to build additional features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account.

"As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with.

"We believe the pattern will be similar to what we’ve seen in Latin America, with engagement growing over time as we continue to deliver a great slate of programming and borrowers sign-up for their own accounts."

At the end of last year Netflix announced a cheaper ad-based subscription service to lure avid film and television fans in with a cut-price deal.

Households in the UK can pay just £4.99 a month to watch Netflix television shows and films interspersed with adverts - but they are only be available to stream on one device at a time.