Today my flatmate talked to a guy at his work who has worked on telecom exchanges and he suggested removing ANYTHING plugged into the phone line (all phones, sky, modem, fax etc), wait 15 mintues then plug the modem back in.
He said, once everything is unplugged, it allows the exchange to reset and hopefully reduce noise.
However, we went one step futher. We plugged devices back into the phone one at a time and watched for any affects over 5 mintues. We found that a phone filter was dropping our internet line the moment it was plugged. We have replaced the line filter with another and so far so good.
Long story short..........a device plugged into the phone line may be causing internet disconnections