The proposed Communications Data Bill has come under fire from the government's terror watchdog.
The plan is to store details of all phone calls, e-mails and internet use in a database, though the contents will not be included. It is due to be introduced in the Queen's Speech in November Home Secretary Jacqui Smith due to set out her current thinking about the scheme.
A Home Office spokesman told the BBC website: “Changes to the way we communicate, due particularly to the internet revolution, will increasingly undermine our current capabilities to obtain communications data - essential for counter-terrorism and the investigation of crime - and use it to protect the public.
“Losing the ability to use this data would have very serious consequences for law enforcement and intelligence gathering in the UK.”
Lord Carlile, the government-appointed reviewer of anti-terror legislation, told The Independent that the government had an "unhappy" record when it came to protecting personal data.
He said: “It is a question of degrees and how it is developed. Searches should be made on a case-by-case basis with appropriate reviewing measures so that they can't be done willy-nilly by government. There must be codes of practice... In counter-terrorism collation is everything but raw data only has a limited use.”
Information Commissioner Richard Thomas has also warned that such a database could be a ‘step too far for the British way of life.'
In his annual report, published in July, Mr Thomas called for a full public debate first. He said: “Do we really want the police, security services and other organs of the state to have access to more and more aspects of our private lives.”
Currently police and intelligence agencies can ask telecommunication providers for information on phone calls made, texts sent and internet sites visited. The provider can query the request, which might then go to the interception commissioner and another watchdog - but under the new proposals, that right would be removed.