The head of the US Copyright Office added her voice Thursday to the chorus of concern over the proposed legal settlement that would allow Google to scan and sell millions of books online.

Google flatly rejected the argument by Marybeth Peters, the US Register of Copyrights, that the book deal violated "fundamental copyright principles" and announced that it would allow rival companies to sell out-of-print books from its vast digital library.

"What this means is that any bookseller -- whether it's Amazon, whether it's Barnes and Noble, whether it's Microsoft, should they ever decide to get into this market -- would be able to sell access to the books which are covered by this settlement," Google's chief legal officer David Drummond said.

Drummond told a congressional hearing on the settlement to a lawsuit filed against Google by US authors and publishers that Google would share the "significant majority" of the revenue from the sales with the book reseller.

Google reached a class action settlement in October with the Authors Guild and the Association of American Publishers to a copyright infringement suit they filed against the Internet giant in 2005.

Under the settlement, Google agreed to pay 125 million dollars to resolve outstanding claims and establish an independent "Book Rights Registry," which will provide revenue from sales and advertising to authors and publishers who agree to digitize their books.

Peters, in testimony to the House of Representatives Judiciary Committee, said her office initially welcomed the settlement but later "grew increasingly concerned."

"The settlement allows Google to reproduce, display and distribute the books of copyright owners without prior consent, provided Google and the plaintiffs deem the works to be 'out-of-print,'" she said.

"The settlement absolves Google of the need to search for the rights holders or obtain their prior consent and provides a complete release from liability.

"It could affect the exclusive rights of millions of copyright owners, in the United States and abroad, with respect to their abilities to control new products and new markets, for years and years to come," she said.

Peters also said the settlement "would encroach on responsibility for copyright policy that traditionally has been the domain of Congress."

Peters was not entirely dismissive of the settlement, however, saying some of its terms have merit, including the creation of a rights registry for authors and publishers and greater accessibility of books for the blind.

"However, none of these possibilities should require Google to have immediate, unfettered, and risk-free access to the copyrighted works of other people," she said. "They are not a reason to throw out fundamental copyright principles."

Peters also alluded to objections to the settlement from abroad, including from France and Germany, saying "in its present form, (it) presents a possibility that the United States will be subjected to diplomatic stress."

Drummond defended the deal saying "the suggestion that the settlement usurps the role of Congress to set copyright policy because the suit took the form of a class action is flatly wrong.

"The settlement does not establish new copyright law," he said. "The settlement represents the progress of science to tackle copyright challenges and help ensure millions of out-of-print books do not fade into oblivion."

A US District Court in New York is to hold a hearing on the settlement on October 7 and the project is also being examined by the US Justice Department, which has until September 18 to voice its opinion.

Google rivals Microsoft, Amazon and Yahoo! have filed objections to the settlement with the court along with the French and German governments, privacy advocates and consumer watchdog groups.

Sony Electronics of Japan, which makes an electronic book reader and offers copyright-free books from Google, and a group of 32 US professors of law and economics, have filed briefs supporting the deal.