The British Government has been named "Villain of the Year" by a group of the world's largest internet companies after pushing through laws across Europe that will force firms to store more information on their customers' web and telephone use.

At an awards ceremony in London last night, the Internet Service Provider Association said the Government had used its presidency of the European Union in 2005 to push through EU-wide data retention laws that will force ISPs and telecoms companies "to retain more data for longer without proper impact assessment".

The association’s members, which include telecoms providers such as BT as well as internet giants such as Google, Yahoo and Microsoft, are already among the biggest repositories of personal data in the world.

Under the legislation, which was given final approval in Brussels this week, they will keep details of their European customers' telephone calls and internet use for up to two years.

Previously ISPs in Britain had operated under a voluntary code included in the 2001 Anti-terrorism, Crime & Security Act. The code suggested that subscriber information be stored for 12 months and web activity information – which includes logs of web pages visited – for just four days.

The Government has argued that such information is a crucial weapon in the fight against terrorism. Its support for the new EU measures measures followed the London bombings in July.

However, an ISPA spokesman told Times Online: "There are strong concerns that these data retention measures would be used for wider purposes than just terrorism.

"There is lot of confusion here, on issues such as data protection and human rights. It is not simply a matter of costs."

The body has suggested that data could potentially be made available to groups other than the security forces, in moves that could breach people’s privacy.

In America, Google recently confronted the White House over attempts to have the internet company hand over search data to the authorities, a row which once again brought online privacy concerns to the fore across the world.

The industry is also concerned ober the financial impact of the fresh legislation. One large internet service provider in the UK told Times Online it estimated the cost at £26 million to set up a system to retain data and another £9 million a year in administration costs.

Peter Cullen, Chief Privacy Strategist at Microsoft, told Times Online last year that globally, political debate has "frequently and increasingly resulted in vague and conflicting legislation" which "was not protecting consumers and was not flexible enough for business".

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