MINISTERS are preparing a major expansion of the Government's powers to monitor the email exchanges and web usage of every person in the UK.

Under legislation expected in next month's Queen's Speech, internet companies will be instructed to install hardware enabling GCHQ – the Government's electronic "listening" agency – to examine "on demand" any phone call made, text message and email sent, and website accessed in "real time".

A previous attempt to introduce a similar law was abandoned by the former Labour Government in 2006 in the face of fierce opposition.

However, ministers believe it is essential that the police and security services have access to such communications data in order to tackle terrorism.

Although GCHQ would not be able to access the content of communications without a warrant, it would be able to trace people with whom individuals or groups are in contact, how often and for how long.

Nick Pickles, director of the Big Brother Watch campaign group, said: "This is an unprecedented step that will see Britain adopt the kind of surveillance seen in China and Iran."

Shami Chakrabarti, director of the civil rights group Liberty, said: "This is a pretty drastic step in a democracy."