Brain-reading implants could allow companies, politicians or marketeers to access people's thoughts and moods, the Royal Society has warned, as it called on the British Government to launch an urgent inquiry into the new technology to protect human rights.

Several companies and labs are developing neural interface software, including Elon Musk who is planning human trials next year to insert electrodes into the brains of people with locked-in syndrome to help them communicate.

Facebook founder Mark Zuckerberg has also expressed interest in "telepathic typing" and the social media company wants to create a headset able to transcribe words at a rate of 100-words per minute, just by thinking.

But in a new report the Royal Society has warned that such technology could lead to privacy abuses or enable hackers to read people's thoughts.

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"Access to peoples' thoughts, moods and motivations could lead to abuse of human rights," the report warns.

"Companies might ask employees to wear interfaces that reveal their feelings. If thoughts could be accessed, then they might be used by corporations in efforts to market goods and services or by politicians or campaigners seeking recruits to their causes.

"The prospect of being constantly watched may itself alter people's behaviour and affect their wellbeing. Health insurers might use access to neural data to refuse cover."

Currently implants are only used for medical conditions such as stroke rehabilitation and epilepsy, but some labs have begun to translate brainwaves into words and pictures and many believe it is only a matter of time before full thought-reading software is a reality.

It is already possible to read moods, using EEG brain scans, which is already harnessed by marketing companies to judge how well advertisements will be perceived, a tactic known as neuromarketing.

And some Chinese companies already monitor employees for signs of anger, anxiety or depression, via devices fitted to safety helmets.

The experts said that brain implants could become as normal as pacemakers or artificial hips are today, allowing people to upload mood, knowledge and memory into a digital cloud.

Implants could allow a tourist to beam a "neural postcard" of what they are seeing, hearing or tasting into the mind of a friend back home and telepathy may even be possible, with people being able to communicate without words.

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The report authors say that neural implants could offer a new frontier in tackling diseases like dementia, paralysis, mental health conditions and even obesity, but lead to ethical questions about what it means to be human.

Dr Tim Constandinou, Director of the Next Generation Neural Interfaces (NGNI) Lab, at Imperial College London and co-chairman of the report, said: "By 2040 neural interfaces are likely to be an established option to enable people to walk after paralysis and tackle treatment-resistant depression, they may even have made treating Alzheimer's disease a reality.

"While advances like seamless brain-to-computer communication seem a much more distant possibility, we should act now to ensure our ethical and regulatory safeguards are flexible enough for any future development."

Report co-chairman Christofer Toumazou, Professor of Engineering at Imperial College London, said: "The applications for neural interfaces are as unimaginable today as the smartphone was a few decades ago.

"They could bring huge economic benefits to the UK and transform sectors like the NHS, public health and social care ... That is why we are calling on the government to launch a national investigation into this emerging field, to identify the UK's priorities and let the public help shape how the technology develops and where we want it to take us."