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No, TOR would work to defeat this.
A TCP/IP packet is made up of header information (where the packet came from and where it's going) + data. Yes, the ISP can see that packets containing data are travelling from your machine to another machine on the Internet. But each packet contains data that is encrypted.
TOR is a "network on top of a network". The packets enter the TOR network on your system and exit on a random system somewhere else, encrypted on the way. So, they won't be able to see which website your visiting because all they will see if encrypted packets passing over their network. And, even if they see the packets leaving the TOR network, they won't know where the packets originally came from.
TOR actually was designed with the idea that the ISP might be spying on people, where ISP equals the government.
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great explanation
, hopefully that should help set some worrying minds at rest.