MPs have told Home Secretary Theresa May that the Communications Data Bill represents a huge invasion of privacy that could be exploited by criminals.
May appeared in front of the Commons Select Committee scrutinising the controversial Bill, which if introduced would require internet and phone providers to store information about all web, social media and mobile activity in the UK for 12 months without the need for consent from users.
The proposed legislation has been dubbed a "snooper's charter" by critics, but the Home Secretary is pushing forward and expects it to become law by 2014.
However, the joint committee of MPs and peers raised concerns that the increased storage of sensitive personal data would be open to abuse by criminals and hackers.
Liberal Democrat peer Lord Strasburger told the Home Secretary that the Communications Data Bill represented a "honeypot for casual hackers, blackmailers, criminals large and small from around the world, and foreign states".
Former Labour minister Nicholas Brown voiced concerns that citizens feared that they "were going to be spied on" and that "illegally obtained" personal data could end up becoming public.
"We will be doing everything we can to ensure that that data is held securely as the data is held today," the Home Secretary responded to concerns that information could be illegally obtained, adding that sanctions will be in place for any breaches in relation to security.
Earlier this week, the committee heard from senior police officers that the Bill is needed to monitor criminal activity, with Greater Manchester chief constable Sir Peter Fahy describing being able monitor who was talking to whom as "absolutely vital" to "proving associations between criminals".
High-profile critics of the government's Communications Data Bill include Wikipedia founder Jimmy Wales and inventor of the world-wide web, Sir Tim Berners-Lee.
Indeed, Wales has pledged that if it were made law, Wikipedia would encrypt communications from the UK to thwart government attempts to monitor people's web usage.
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