Controversial moves to give sweeping new powers to the police and security services to monitor phone, email and internet use are set to be opposed by Nick Clegg.
The Deputy Prime Minister is expected to veto the draft Communications Data Bill, which has been denounced by critics as a “snooper’s charter”.
Theresa May, the Home Secretary, insists the moves are essential to keep track of terrorists and major criminals that are increasingly using Skype, email and social networks to evade the authorities. It wants the new powers to be in place by 2014.
But an all-party group of MPs and peers scrutinising the draft Bill will list a series of serious criticisms of the plans in a report next month. One Whitehall source said: “The committee is becoming more sceptical.”
It will accuse the Home Office of failing to make a “compelling case” for the proposals, which it warns could infringe civil liberties and create a pool of confidential information that could be open to abuse.
The committee will also warn of the potential cost to telecommunications companies and internet service providers from having to store the required data for 12 months.
Sources close to the committee are understood to believe the Bill cannot survive in its current form and may have to be dropped altogether.
Mr Clegg, much of whose party has already signalled its hostility to the measures, told the Liberal Democrat conference two months ago that he was prepared to veto the plans.
One senior Liberal Democrat told the Independent: “If the committee says there is no compelling case for the plans, it would be pretty hard for us to support it.”
Withdrawal of Lib Dem support for the measure would open up a new Coalition fault-line at a time of intensifying tensions between the two parties. Mr Clegg has met David Cameron to discuss the likely impasse over the Bill.
The original publication of the proposals, which built on an earlier scheme abandoned by the last Labour government, provoked a civil liberties storm.
Ms May stressed the police and security services would not be able to read the contents of messages, but would merely monitor whom internet users have contacted and when and where the contacts took place.
Critics retort that in some forms of online communication it is increasingly difficult to separate the content of messages from details of when they were sent.
In the ensuing uproar over the plans, the Government agreed to publish the proposals in draft form, effectively delaying them for at least a year. At Mr Clegg’s insistence, the all-party “scrutiny committee” was established to examine the draft Bill. One of its members, the Liberal Democrat MP Julian Huppert, recently said the measure would have to be “massively rewritten to protect our civil liberties”.
Labour is being opaque over its attitude to the plans, but a number of Tory MPs are also hostile to the moves.
The former shadow Home Secretary, David Davis, has said the new powers would be “incredibly intrusive” and only catch “the innocent and incompetent”.
Taxpayers will face a bill of up to £2.5bn over ten years for the measures, but the Government says the country will save far more from thwarting crime.