Town halls will be ordered by the Government to stop asking residents questions about their sexuality, race and health.
Communities Secretary Eric Pickles will issue new guidelines for local authorities removing the requirement for them to undertake "intrusive lifestyle and diversity" surveys.
Aides point to a series of high-profile cases where councils demanded deeply personal information when people signed up for services.
That includes revelations last month that libraries in Islington, north London, were asking people registering to borrow books if they had cancer, HIV, or diabetes and whether they were transgender.
Mr Pickles' one-page statutory guidance replaces "the 56 pages of John Prescott's so-called 'Best Value' guidance", according to aides.
It "unambiguously" states that there is no requirement for councils to undertake such lifestyle and diversity questionnaires of residents or firms who are their suppliers.
Mr Pickles said: "At a time when taxpayers are watching their pennies, the last thing councils should be doing is sending out unnecessary and intrusive questionnaires.
"Local residents shouldn't be asked to reveal detailed personal information just because they've enquired about getting their bins emptied or how to join their local library.
"Clamping down on such town hall activity will save taxpayers' money and protect the privacy of residents of all backgrounds."