Stuart Gray, a spokesperson for Telstra, said that the issue was caused by problems with the ADSL authentication servers.
"We've had a problem with our authentication servers, but it's now been resolved," he said.
Users who were logged in to Bigpond during the outage were not affected, but subscribers who tried to log on during the problem period were unable to authenticate, so they couldn't get online.
The nation-wide problem only affected ADSL customers. Cable and dial up users were not impacted.
Bigpond was plagued with authentication server problems in 2001, leading in one instance to a full business day outage.
While Telstra are investigating the cause of the problem, they are not anticipating further issues.
"When this sort of thing happens we pay a lot of attention to making sure that things stay stablem," Gray said.
Telstra may have to pay rebates to customers who have been affected by the authentication server outage.
"This problem is covered by the Service Level Agreement, so impacted customers will receive a rebate if their service level drops below 99 percent." said Gray.
This article is WRONG - the outage was NOT only for ADSL users. Cable customers also experienced a day's outage on Monday - I know, I was one of them.