No protest group has used such alarming methods to attack a well-known high street name. Until now. And the 'enemy'? McDonald's, one of the most powerful companies in the world.

Somewhere in McDonald's there's the person who decided that it would be a good idea to sue a bunch of environmental activists who had been leafleting restaurants with claims about the company's policies on labour and animal welfare. It was a no-lose situation. How long could the case last? The burger giant's millions were bound to win. And think of the PR value in proving all those claims to be false. In the end, McDonald's succeeded overall and were awarded damages. The trial judge found that out of the seven charges made against McDonald's in the leaflets, five were untrue.

But the McLibel trial turned out to be a PR nightmare of unimaginable proportions and it just keeps coming back to haunt them. From October 15, People for the Ethical Treatment of Animals (Peta) is starting a large scale anti-McDonald's advertising campaign across America based on the findings of the British trial. In his summing up, Chief Justice Roger Bell also found that McDonald's was "culpably responsible for cruel practices" in the raising of broiler chickens, laying hens, and pigs. He added that animals used to produce food for McDonald's suffered severe restriction in their movement while they were being reared and chickens had their throats cut while they were fully conscious.

Taking this as a cue that it's now legally possible to call McDonald's cruel, Peta has put together a poster featuring a skinned cow's head with the line "Do you want fries with that?" Another shows company mascot Ronald McDonald brandishing a blood-stained butcher's knife and a slaughtered chicken with the slogan "Son of Ron - America's No.1 Serial Killer".

Both use the hook line "McDonald's - Cruelty to go". The adverts will appear on posters in Chicago, the hometown of McDonald's, and Peta's headquarters in Virginia before rolling out across the country. Space has also been booked in USA Today and the International Herald Tribune.

Created by a UK advertising consultancy, Lawrence & Beavan, which has worked with Peta since 1989, the campaign is crossing the Atlantic at the end of October and posters are planned for the UK in November.

"We've been trying to talk to McDonald's about their treatment of animals for two years after the McLibel trial," says Bruce Friedrich, vegetarian campaigns co-ordinator for Peta. "It became clear that they had no intention of changing a single thing about the way they treated animals." McDonald's disagree. Responding to Peta in August 1999, Jack Greenberg, chairman and CEO of McDonald's, said: "We at McDonald's are sin cere in our desire to provide leadership in the area of welfare. While we certainly influence the food industry, and have been influenced by it, McDonald's alone, or overnight, cannot transform such a broad industry.

"One of [our staff] has briefed [Peta] on advice we received from nationally recognised animal welfare consultant, Dr Temple Grandin, on progress we are making in international markets."

Peta's campaign marks the next stage in a curious trend in protest - the move from street demonstrations to advertising creativity. During the 80s and early 90s, British trade unions - in particular Unison - began shifting some of their campaigning money into press ads. Campaigning charities like the RSPCA and Amnesty are also masters of using adverts to raise awareness of issues.

So far, however, no protest group has used capitalism's favoured blitzkrieg technique to directly attack a company or individual. In doing so, Peta has picked on one of the big boys. This campaign has cost the group around $200,000 while McDonald's spends over $2bn a year on advertising. Of course, that sort of spend carries a certain cachet in medialand - even in the traditionally rumbustuous world of US advertising where knocking copy is par for the course.

"We've already had problems with poster companies in Tampa, Florida and Washington DC who have objected to the copy, basically because of the word McDonald's," says Friedrich. "They're worried about offending one of their biggest clients. We're trying to amend the copy and it'll probably simply read 'McCruelty to go'. We've also had some press refuse to carry the ad."

Over in the UK, meanwhile, the self-regulating advertising industry has unilaterally acted to stifle the Peta campaign at birth. Last Thursday, the Committee for Advertising Practice - a voluntary body set up by the advertising industry to oil the wheels of creativity and ensure the government doesn't impose legal rules on issues like taste and decency - and the Outdoor Advertising Association effectively banned the Peta advert before the organisation even approached poster companies. The decision was based on a story carried in Marketing magazine on Wednesday, so that any attempt by Peta to book poster space will be met with a flat refusal.

Conspiracy theorists could question whether a campaign which didn't attack a major advertiser would have elicited such a rapid response, but the Advertising Standards Authority (ASA) protests that this is a creative rather than a political issue. It cites a previous poster from a body called Respect For Animals, which showed a skinned fox's head and prompted floods of complaints to the ASA.

For the moment, there's a stalemate. Peta is considering its options and the advertising industry is waiting with an air of simmering discontent. Somewhere in McDonald's, that person who decided to go ahead with the libel action is breathing a sigh of relief. For now.