Internet companies would be required to install hardware which would allow the Government Communications Headquarters (GCHQ), referred to as Britain's electronic 'listening' agency, to gain real-time access to communications data.
The new law would not allow GCHQ to access the content of emails, calls or messages without a warrant, but it would allow it to trace who an individual or group was in contact with, how frequently they communicated and for how long.
The Sunday Times newspaper, which first reported the story, said some details of the proposals were given to members of the Britain's Internet Service Providers' Association last month.
"As set out in the Strategic Defence and Security Review we will legislate as soon as parliamentary time allows to ensure that the use of communications data is compatible with the government's approach to civil liberties," the Home Office spokesman said.
Any proposed legislation changes are likely to face stiff opposition in both houses of the British Parliament.
A similar proposal was considered by the then-ruling Labour party in 2006 but was abandoned in the face of fierce opposition by the Conservatives and Liberal Democrats, who are junior partners in the ruling coalition.
The proposed legislation could reflect the U.S. Patriot Act, controversially introduced six weeks after September 11 in 2001, to expand the government's authority to monitor the communications activity of its citizens.
(Reporting by Stephen Mangan; Editing by Michael Roddy)
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