The revelation is likely to cause alarm among civil-liberties campaigners. It could allow the state to get details of almost every aspect of an individual's life. One academic cryptographer says it will create a "surveillance society" of which even Hitler and Stalin could never have dreamt.
The technique, known as the "key escrow system", would enable the Government to unlock the encryption systems - modern encoding methods - that safeguard communications on mobile telephones, fax machines, electronic mail systems and computers. Without encryption, medical and banking records, as well as telephone conversations, can be hacked.
Work on the project at Royal Holloway College, London University, is being funded by the Government and by Vodafone, one of the largest UK manufacturers of telecommunications equipment.
Fred Piper, professor of mathematics at Royal Holloway and one of Britain's leading cryptographers, says: "They don't want a project called key escrow because that would openly admit they're doing it." Professor Piper discloses his involvement in a Channel 4 Equinox programme, "Cybersecrecy", to be broadcast tonight.
He is quoted as saying: "The project is being used as an excuse to try to develop the British key escrow system and they've been looking for ways to get a few people like me involved without making it obvious."
The programme quotes a statement from the Department of Trade and Industry that confirms the existence of the project for the first time. It says that officials from various departments have been considering Government policy on encryption. ''Such a policy,'' it adds, ''will need to balance the legitimate requirements of industry, commerce and individuals for a range of encryption services with the national security needs of the authorities in fighting terrorism and crime.''
The key escrow system was developed by the American government, which feared that the spread of encryption technology was making it hard for the FBI and the CIA to tap communications.
In 1993 it produced an encoding device for telephones and computers known as the "Clipper Chip". This had an electronic "back door" that would allow the intelligence agencies, using special electronic keys, to eavesdrop even if material was encrypted.
However, the computer industry and privacy campaigners were outraged when the Clinton administration attempted to press ahead with the Clipper Chip last year. It has now run into the buffers, partly because a serious flaw in the system has been found.
Professor Piper says that Vodafone is involved because the company fears that the Government will clamp down on encryption if it cannot gain access to encrypted material.
Academic cryptographers are divided. Ross Anderson of Cambridge University tells the programme: "The transactions which make up our daily lives are rapidly becoming electronic. If we're denied the means to protect them, we're not just talking about hackers and electronic crime. We're talking about a surveillance society in which authority will know every detail of our lives. Even Hitler and Stalin couldn't have dreamt of that."
But an advocate of the Clipper initiative, Dorothy Denning of Georgetown University in Washington, says : "I think you have to make sure encryption itself does not become a threat to society. If you've got terrorists or criminals of any type who are using encryption on their communications, that would preclude law enforcement officials being able to access those communications."Reuse content