Internet black boxes will be used to collect every email and web visit in the UK under the Government's plans for a giant "big brother" database.
Home Office officials have told senior figures from the internet and telecommunications industries that the "black box" technology could automatically retain and store raw data from the web before transferring it to a giant central database controlled by the Government.
Plans to create a database holding information about every phone call, email and internet visit made in the UK have provoked a huge public outcry.
Richard Thomas, the Information Commissioner, described it as "step too far" and the Government's own terrorism watchdog said that as a "raw idea" it was "awful".
Nevertheless, ministers have said they are committed to consulting on the new Communications Data Bill early in the new year.
News that the Government is already preparing the ground by trying to allay the concerns of the internet industry is bound to raise suspicions about ministers' true intentions.
Further details of the database emerged on Monday at a meeting of internet service providers (ISPs) in London where representatives from BT, AOL Europe, O2 and BSkyB were given a PowerPoint presentation of the issues and the technology surrounding the Government's Interception Modernisation Programme (IMP), the name given by the Home Office to the database proposal.
Whitehall experts working on the IMP unit told the meeting the security and intelligence agencies wanted to use the stored data to help fight serious crime and terrorism, and said the technology would allow them to create greater "capacity" to monitor all communication traffic on the internet.
The "black boxes" are an attractive option for the internet industry because they would be secure and not require any direct input from the ISPs.
During the meeting, Whitehall officials also tried to reassure the industry by suggesting that many smaller ISPs would be unaffected by the "black boxes" as these would be installed upstream on the network and hinted that all costs would be met by the Government.
"It was clear the 'back box' is the technology the Government will use to hold all the data. But what isn't clear is what the Home Secretary, GCHQ and the security services intend to do with all this information in the future," said a source close to the meeting.
He added: "They said they only wanted to return to a position they were in before the emergence of internet communication, when they were able to monitor all correspondence with a police suspect.
"The difference here is they will be in a much better position to spy on many more people on the basis of their internet behaviour. Also there's a grey area between what is content and what is traffic. Is what is said in a chat room content or just traffic?"
Ministers say plans for the database have not been confirmed, and that it is not their intention to introduce monitoring or storage equipment that will check or hold the content of emails or phone calls on the traffic.
A spokesman for the Home Office said that Monday's meeting provided a "chance to engage with small communication service providers" ahead of the formal public consultation next year.
He added: "We need to work closely with the internet service providers and the communication service providers. The meeting was to show the top-line challenges faced in the future. We are public about the IMP, but we are still working out the detail. There will a consultation on the Communications Data Bill early next year."
A spokesman for the internet Service Providers Association said the organisation was pleased the Home Office had addressed its members and was keen to continue dialogue while awaiting a formal consultation.
Database plans were first announced by the Prime Minister in February.
It is not clear where the records will be held but GCHQ may eventually be the project's home.
- THE INDEPENDENT