Thousands of BT broadband customers are to have their internet usage tracked so they can be sent targeted online advertising in a final trial before the service is launched network-wide.

BT customers will be invited to take part in the trial of Phorm’s controversial advertising system Webwise from tomorrow.

BT and Phorm said in a statement: “Following successful completion of this trial and an appropriate period of analysis and planning, it is currently expected that Phorm’s platform will be rolled out across BT’s network.”

The trial was due to begin in March but has been delayed by technical problems and legal controversy.

Up to 10,000 BT customers will have their internet use monitored and categorised under the new trial.

Phorm’s online targeting service is designed to make advertising more relevant by taking account of all the websites a person visits, rather than just the content of a single web page.

Webwise works by having equipment at internet servive providers such as BT that will capture, for each site you visit, the URL, any search terms entered in a search engine, and other data from the page, in order to categorise it.

When users sign up for the system their browsers are tagged with a cookie - a small program with a unique code number used to identify each user. This provides the data used to create a profile of the type of websites each user visits.

When people visit a page where the advertising is sourced from the Open Internet Exchange set up by Phorm, they will see adverts targeted to their profiles. For example, someone who has visited a lot of travel-themed websites would see adverts for holidays, hotels and flights.

Categories of advertising campaigns that Webwise will not allow include tobacco, drugs, alcohol, pronography, gambling and UK political parties.

On its web pages about the new service, BT highlights how the new system will improve the user’s internet security by checking against a list of fraudulent websites.

Customers can decline to enter the trial, and will not see the invitation again unless they delete the cookie from their browser, for example as part of routine browser maintenance recommended for secure and efficient performance. BT admits under a heading “Isn’t that a pain in the neck?” that the only to decline the invitation permanently is to “set all your browsers to block cookies from the domain webwise.net".

Phorm has fought off concerns from privacy experts that Webwise is too intrusive.

In April the Information Commissioner said that Webwise did not represent a threat to privacy, but concerns from consumers have persisted. The Foundation for Information Policy Research, a group of Cambridge academics, has criticised the platform, saying that it infringed users’ privacy.

BT has admitted that it carried out secret trials of the Phorm technology in late 2006.

The Information Commissioner’s Office said that the service did not infringe an ISP customer’s privacy, because it did not collect information that would allow them to be identified. The system will also give users the opportunity to opt out of individual tracking, meaning that it does not breach the principles of the Data Protection Act, the commissioner’s office said.

Several websites have sprung up urging consuemrs not to use any ISP that introduces Webwise.

BT says on its Webwise site: “No personally-identifiably user data is stored as part of Webwise. Only the links between a random unidentifiable number contained in a cookie and advertising categories are stored in the system.

“This information is deleted after a maximum of six months. It is simply not possible to reverse engineer user identity using this information.”

ISPs hope that Phorm’s technology will enable them to increase their share of the burgeoning online advertising market. Analysts have predicted that BT’s cut from the online advertising could be as much as £85 million a year.

Advertisers are also said to be enthusiastic, because it will give them the chance to tailor their marketing more closely.

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