The government is considering introducing internet filters, such as those used to block China off form the worldwide web, in order to stop Icelanders downloading or viewing pornography on the internet.
The unprecedented censorship is justified by fears about damaging effects of the internet on children and women.
Ogmundur Jonasson, Iceland's interior minister, is drafting legislation to stop the access of online pornographic images and videos by young people through computers, games consoles and smartphones.
"We have to be able to discuss a ban on violent pornography, which we all agree has a very harmful effects on young people and can have a clear link to incidences of violent crime," he said.
Methods under consideration include blocking access to pornographic website addresses and making it illegal to use Icelandic credit cards to access pay-per-view pornography.
A law forbidding the printing and distribution of pornography is already in force in Iceland but it has yet to be updated to cover the internet.
The proposals are expected to become law this year despite a general election in April.
"There is a strong consensus building in Iceland. We have so many experts from educationalists to the police and those who work with children behind this, that this has become much broader than party politics," Halla Gunnarsdottir, a political adviser to Mr Jonasson told the Daily Mail.
"At the moment, we are looking at the best technical ways to achieve this. But surely if we can send a man to the moon, we must be able to tackle porn on the internet."
The proposed control over online access, that mirrors attempt in dictatorships such as China to restrict the internet, is justified as a defence of vulnerable women and children.
"Iceland is taking a very progressive approach that no other democratic country has tried," said Professor Gail Dines, an expert on pornography and speaker at a recent conference at Reykjavik University. "It is looking a pornography from a new position - from the perspective of the harm it does to the women who appear in it and as a violation of their civil rights."