The government has proposed new rights for local councils and health authorities to access public internet records.
The plans were originally drawn up following the 7/7 London bombings in 2005 and involve telecommunications companies holding on to internet traffic and VoIP details for 12 months should the authorities require them.
A Home Office spokesman commented: "This data allows investigators to identify suspects, examine their contacts, establish relationships between conspirators and place them in a specific location at a certain time."
Despite a number of firms already voluntarily retaining individual web activity details, should the European directive go through, it would be made mandatory for all companies.
However, the proposed legislation, dubbed by a number of MPs as the "snooper's charter", could cost taxpayers around £46 million due to the billions of data incidents which would need to be stored on a daily basis.
The government also has plans to draw up a 'super database' containing information on all telephone calls and internet activity.
Under current legislation, telecom firms can apply for grants to cover the cost of surveillance of public web activity required by the government.