The personal bank accounts of British citizens will be made available to American investigators working on counter-terrorism cases when MEPs approve a request made by President Obama today.
The controversial deal raises serious concerns about the privacy rights of British and other EU citizens whose personal banking affairs are held on a giant database that covers the vast majority of bank-to-bank financial transactions across Europe.
The Obama administration claims that the secret database is vital in the continuing investigation into al Qa'ida operations. Members of the European Parliament are opposed to handing over the information without safeguards.
At the centre of the controversy is a privately run database based in Belgium which records 80 per cent of all EU financial transactions.
In February the EU parliament refused to authorise further transfers of information to Washington until privacy concerns had been properly addressed by the US.
The MEPs voiced concerns over a lack of privacy guarantees in the original deal, which does not allow for suspicious transactions to be singled out from bulk data, meaning that the financial information of innocent EU citizens could be transferred and stored in the US for up to five years.
In the last few days the Americans have offered "major concessions" in an effort to overcome EU concerns ahead of the key vote in the EU parliament.
Senior advisers to Barack Obama have warned Europe that blocking access to the database has compromised the national security of Britain and other EU states.
A senior US Treasury spokesman said that the EU action had blacked out potentially critical intelligence concerning the financing and identification of al-Qa'ida and its affiliates.
Highlighting the importance of the database in the fight against terrorism the official said that intelligence had been used to investigate the July 7 attacks in London and the foiled liquid bomb plot against transatlantic flights in 2006. Adam Szubin, the man who has led America's terrorist finance tracking investigations, told The Independent at a briefing in Washington that President Obama had been personally involved in the latest developments concerning the database, run by a private consortium, Society for Worldwide Interbank Financial Telecommunication (Swift).
He added: "With respect to the internal safeguards and the oversight, the right of redress, rectification and access, we believe this agreement is substantially strengthened in a way that speaks to all of the core European concerns that have been raised... The ultimate result is very strong and speaks for itself."
Among the newly proposed safeguards are provision for a European judge to review the way the US uses the information and report to the European Commission.
Liberal Democrat European justice and human rights spokeswoman and London MEP Sarah Ludford said: "We have insisted that the bulk transfer of information be a transitional solution only. The EU must develop its own capacity to filter and extract data in Europe, obviating both worryingly large block handovers and an absurd reliance on the US to detect terrorists plotting on our territory."