You could use custom Hosts files. Basically the hosts file is a database of internally translated hostnames e.g.
instead of going to 212.58.224.138, you could send it to the loopback address,127.0.0.1, which of course has no associated webpage. You could also make the browser go to another site eg 173.194.36.104 - so if they think they are going to the BBC site, they find themselves on the Google search page.
In Windows XP the hosts file is found in c:\WINDOWS\SYSTEM32\DRIVERS\ETC\hosts (there is no file extension). It would be necessary to modify each workstation's hosts file, but it can be done with a relatively simple batch file across your peer network.
The following contains a lot of information on how to use the hosts file to block malware, and potentially hazardous sites:
It is also possible to block addresses at the router, but the technique will depend upon the router itself. At home, I use a Dlink DIR615 wireless router, which allows the administrator to set up "parental controls" for up to 10 sites.
Then there is the windows firewall, where each machine would need to be set up individually AFAIK.
This is why large organizations use Windows domains to manage security, and not workgroups!