Emergency laws will be rushed through Parliament to allow police and MI5 to probe mobile phone and internet data, it has been reported.
Under the plans to be announced today, phone companies and internet firm will be required to store data for 12 months, The Sun reported.
Home Secretary Theresa May is reported to have struck a deal on the issue with Deputy Prime Minister Nick Clegg, who had previously resisted efforts to pass legislation to retain data.
The Government has been forced to act as a result of a European Court of Justice (ECJ) ruling in April that a European Union data retention directive, which was implemented by Labour in 2009, was invalid because it interferes in a particularly serious manner with the fundamental rights to respect for private life and to the protection of personal data.
Mr Clegg effectively blocked the Government’s last attempt to legislate on the issue, with the Liberal Democrats opposing the Data Communications Bill – the so-called “snooper’s charter”.
In an indication that the new laws will be more limited than the previous proposals, a senior Lib Dem source said: “We’ve blocked the snooper’s charter before and will continue to do so.”
The powers will be limited to just high counter-terrorism operations and the detecting of very serious crime, The Sun reported.
The new deal comes amid fears of the terrorist threat posed by Britons who have been radicalised by groups fighting in Syria and Iraq returning to the UK.
A security source told The Sun: “The ECJ have potentially blinded us with this awful ruling, and the security implications for the country are very serious indeed.
“Ministers have been told they must act as soon as possible, or blood could be on their hands.
“It’s about our ability to retain the existing powers we had, not about gaining any new ones.”
The newspaper said the proposals would be discussed at an emergency meeting of the Cabinet before a rare joint press conference by the Prime Minister and Deputy Prime Minister.
Earlier this week Mrs May suggested that Britain’s child sex abuse investigation body needs more access to phone and internet records so it can better investigate crimes.
She said the Child Exploitation and Online Protection Centre (Ceop) needed to continue to have access to communications data.
Mrs May told MPs: ” As that degrades of course it makes it harder for Ceop to investigate certain crimes.”