restrict internet access in windows xp

Please provide more detail....

What kind of network you have? Are you using dialup or other?

Restrict user to access the internet from Windows Server 2003 Ent.
In Active Directory Users and Computers create a Security Group in Security Group NoIe.

Right mouse click on the Domain Name and make an Organisational Unit named NoIe. Right mouse click on it and select Group Policy click on Open.

Right mouse click on Group Policy Objects select New and type in NoIe.

Right mouse click on NoIe and select Edit.

Navigate to User Configuration \Windows Settings \Internet Explorer Maintenance \Connection \Proxy Settings.

Set all instances of proxies to "127.0.0.1" or any non-valid proxy address.

Navigate to User Configuration \Administrative templates \Windows Components \Internet Explorer \Internet Control Panel and disable the Pages that you do not want the User to access especially the Connections Page.

Close the Editor.

Right mouse click on the NoIe Organisational Unit and select Link an Existing GPO and select NoIe.

Add the Users that you do not want to access the Internet to the Security Group NoIe.

Add the Users that you do not want to access the Internet to the Organisational Unit NoIe.

Left mouse click on Start and select Run

Type in gpupdate /force and select OK.

When it has finished updating press n.

Works with XP and Vista

Another alternative

Configuring Clients to Proxy using Group Policy or Login Script

http://www.stbernard.com/ip4kb/iPrism/Networking/Sessions-Clients/Browsers/IP0346.htm

Create setproxy.reg (any filename can be used)

Open notepad & type in as follows:

Windows Registry Editor Version 5.00 (or the appropriate version of regedit, if different)

[HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Internet Settings] "ProxyServer"=":" "ProxyEnable"=dword:00000001

Copy setproxy.reg to login script folder.

Add the following line to the login script.

Regedit /s setproxy.reg