Ministers today signalled they will rewrite a Bill which gives police and security services new powers to monitor communications, after an influential parliamentary committee branded it “overkill” and Deputy Prime Minister Nick Clegg said it needed a “fundamental rethink”.
Home Secretary Theresa May said she was determined to press ahead without delay with the Communications Bill, which has been dubbed a "snooper's charter" by critics.
But she accepted the "substance" of a highly-critical report by the committee set up to scrutinise the draft version of the Bill, which would allow a range of official bodies to monitor emails, web phone calls and activity on social networking sites.
Under the draft Bill, details of these activities - but not their content - could be kept for a year, but there would be no real-time monitoring of communications.
Police, the security services, the new National Crime Agency and HM Revenue and Customs (HMRC) would be able to access the data, but the draft Bill also gives the Home Secretary the power to extend access to others, such as the UK Borders Agency.
The committee of MPs and peers said the legislation would give the Home Secretary "sweeping powers to issue secret notices" ordering communications companies to disclose "potentially limitless categories of data".
And they accused the Government of using "fanciful and misleading" figures to support its case for the legislation.
Mr Clegg last night said he was ready to block the Bill in its current form, and called on the Home Office to go "back to the drawing board".
"I believe the coalition Government needs to have a fundamental rethink about this legislation," said the Deputy Prime Minister.
"We cannot proceed with this Bill and we have to go back to the drawing board. We need to reflect properly on the criticisms that the committee have made, while also consulting much more widely with business and other interested groups."
Urging ministers to take the committee's concerns on board, Mr Clegg said that the creation of any new powers must be done "in a proportionate way that gets the balance between security and liberty right".
Conservative security minister James Brokenshire today accepted that the legislation will have to be changed before being tabled in Parliament.
"We know that there is work that needs to be done and I absolutely accept that," he told the BBC Radio 4 Today programme.
"What we want to do is work through on these points, recognising that the Deputy Prime Minister has set out his concerns and making sure that the substance of the recommendations from the joint committee are addressed. We agree with that, that's what we will now be doing."
Mrs May used an article in The Sun to stress that legislation is needed to help security agencies keep pace with technological advances, which she said were being exploited by terrorists and paedophiles.
"You and your loved ones have the right to expect the Government to protect you from harm," said the Home Secretary.
"I will not allow these vitally important laws to be delayed any longer in this Parliament. This law is needed and it is needed now. And I am determined to see it through."
But she added: "Parliament has made suggestions about how our plans could be improved and we will accept the substance of its recommendations."
The committee set up to scrutinise the draft Bill dismissed ministers' argument that new powers for security agencies must be drawn broadly in order to "future-proof" the legislation against potential developments in technology.
Committee chairman Lord Blencathra said: "There is a fine but crucial line between allowing our law enforcement and security agencies access to the information they need to protect the country, and allowing our citizens to go about their daily business without a fear, however unjustified, that the state is monitoring their every move."
The committee found the Government was using "fanciful and misleading" figures to suggest that the reforms will deliver savings of three times its £1.8 billion costs over 10 years.
And it said that ministers' claims that a quarter of the communications data required by investigators is currently unavailable were "unhelpful and potentially misleading".
Plans to retain web logs carried a "possible risk" of being hacked or falling into the wrong hands, which would allow "potentially damaging inferences about people's interests or activities" to be drawn, warned the report.
Lord Blencathra said: "The breadth of the draft Bill as it stands appears to be overkill and is much wider than the specific needs identified by the law enforcement agencies.
"We urge the Government to reconsider its zeal to future-proof legislation and concentrate on getting the immediate necessities right."
Meanwhile, a separate committee of MPs warned Prime Minister David Cameron that more work must be done on the draft Bill if the Government wants to win over Parliament and the public.
The Intelligence and Security Committee, which scrutinises the work of the security agencies, also criticised the 25% figure, warning that "superficially precise estimates" of the size of the capability gap were misleading and could detract from efforts to address the issue.