My hope is that governments will try and work something out with the industry that is workable, as opposed to simply imposing another huge layer of bureaucracy

Rowan Bosworth-Davies, Control Risks

At issue is the fact that the growth of the internet has made it more difficult for governments to monitor communication.

"Governments always like to be in the position to control communications and to be able to control information flows," Rowan Bosworth-Davies at security specialists Control Risks Group said.

"Any system that enables the ordinary citizen to be able to communicate as freely as the internet does, and e-mail systems do, can also possess a downside as far as governments and security agencies are concerned," he added.

European proposals

Similar proposals have been put to the European Council of Ministers, according to Pamela Taylor, the CBI's senior e-business policy advisor.

"This is a reaction to what is a very serious terrorist attack, but the legislation that is introduced now we will have to live with for the next number of years," she said, warning against hasty legislation.

The proposals in both Britain and Europe are still at an early stage.

There have been suggestions that company email records should be kept for 12 months, four times longer than current practice.

Claire Guilders from internet service provider AOL Europe says this would mean her company would have to store up to 25 billion IP addresses each year on a rolling basis.

E-mail storage

"That is a vast amount of data," she said.

"How can those sorts of vast quantities of data ever be retrieved or useful to the police in a way that is logistically practical?"

Implementing the proposed rules could be cripplingly expensive for some companies, the CBI's Ms Taylor warned.

Retrieving that data could mean many man-hours lost to business, she added.

There is also the issue of confidentiality.

Mr Bosworth-Davies said all governments must maintain respect for privacy.

"My hope is that governments will try and work something out with the industry that is workable, as opposed to simply imposing another huge layer of bureaucracy which has got to be enforced and therefore has got to be paid for ultimately by the taxpayer," he said.