The online advertising network Phorm has been criticised by a leading internet think tank on the grounds that its data gathering system is illegal.

Phorm collects information on web users by examining the sites they visit and building up a profile of their interests, which advertisers use to target them with relevant promotions and banners. The network is already used by several UK internet service providers, including BT, Virgin Media and TalkTalk.

But the fact that Phorm does not ask for a user's consent before it conducts these activities makes it illegal, according to the Foundation for Information Policy Research (FIPR). The group expressed its concerns yesterday in an open letter to Richard Thomas, the information commissioner.

"Classification by scanning in this way seems to us to be highly intrusive," said Nicholas Bohm and Richard Clayton, the general counsel and treasurer of the FIPR.

"We think that it should not be undertaken without explicit consent from users who have been given particularly clear information about what is liable to be scanned. Failure to establish a clear and transparent opt-in system is likely to render the entire process illegal and open to challenge in UK and European courts."

Both Phorm and BT deny that the advertising network is breaking the law. The legal argument rests upon interpretation of the Regulation of Investigatory Powers Act 2000, which covers the interception of communications.