The European Commission on Wednesday adopted a proposal that details of all telephone, Internet and e-mail traffic should be logged to combat terrorism and serious crime.
The move challenges European Union member states who are negotiating a rival plan.
Telephone and Internet firms are waiting for the outcome of the clash as the proposals differ over how much industry will end up paying to store data, depending on how much longer it has to be kept.
The push for EU-wide data storage came after the Madrid bomb attacks last year and intensified after the London bombs in July when Britain took over the rotating EU presidency.
The Commission's text aims to harmonise the current patchwork of data retention practices across the bloc.
"We take full account of two main, fundamental rights -- the right to security ... and privacy protection," Commission Vice President Franco Frattini told a news conference.
The Commission proposes storing data related to mobile and fixed telephone traffic for a year to allow the police to trace the time, place, and numbers used, even for unsuccessful calls, Frattini said.
Internet data such as e-mails and the Internet server used, though not the web sites surfed, would be kept for six months, though it was not clear how this would apply to Internet cafes, for example. Numbers dialled using Internet telephony would also be stored.
The member states will be able to ask firms to keep data for longer on grounds of national security. Their own proposal envisages storing data between one and three years, and phone companies typically store data for three months for billing.
Max-Peter Ratzel, director of EU police agency Europol said there was an urgent need to store data for investigations. "Half a year, from my point of view, is definitely too short. If we get one year, we can live with that," Ratzel said.
As with the member state proposal, there is no intention to store the content of communications.
The Commission's proposal will need to be agreed by member states and the European Parliament, while the rival plan will need unanimous agreement among the 25 EU governments.
Some member states fear involving parliament will slow down legislation as EU lawmakers are seen as being more open to pressure from industry campaigners and civil liberties groups to water down the proposals.
Frattini said there is agreement between parliament, member states and the Commission to approve the Brussels executive's bill by year end. "Counter terrorism effectively requires that we have no time to loose," Frattini said.
The Commission will also unveil a data protection initiative in the first week of October to safeguard privacy, he said.
A British presidency spokesman said on Tuesday that ministers will compare both proposals at a meeting in October and decide how to proceed, though parliament was already claiming victory.
"Winning co-decision for Parliament on this important area is a success for Parliament's prerogative," said German liberal parliament member Alexander Alvaro of the legislature's justice and home affairs committee.
"We must now examine carefully the Commission's draft which seems at first glance to be heading in the right direction," Alvaro said.
Under the Commission proposal, telecom and Internet firms would be reimbursed for the "demonstrated additional costs", while Britain has said telecom firms are rich enough to pay the extra storage costs themselves.
EU officials could not give precise reimbursement costs, but said it could run from several to hundreds of millions of euros.
Telecom firms say they already help the police with data requests on a case-by-case basis, but the Commission said that some traffic data is not always kept for billing purposes such as for flat rate tariffs, pre-paid and free services.
EU member states have a patchwork of retention practices with 15 of the 25 having no mandatory obligations on firms, while in those where there is such an obligation the period and scope varies significantly.
Commission officials said firms outside the EU, but handling calls to and from the bloc, would likely be impacted by the rules.
(Additional reporting by Mark Trevelyan in Berlin)
Return to internet news headlines
View Internet News Archive