The UK government is considering implementing a database that can monitor and log the internet browsing habits, emails and phone calls of every Briton, according to a report in the Sunday Times.

If the proposal is implemented, the Government Communications Headquarters (GCHQ) would be in charge of handling the project, which is expected to cost around £12bn.

The reported aim would be to counter terrorism and organised crime. Currently MI5 has to apply to the Home Secretary for warrants to intercept specific email and website traffic.

If the new plan is adopted it will allow GCHQ to monitor internet and mobile phone networks live. If the database is set up, this means it could also work in tandem with the US-based Echelon project as a ‘tool’ against terrorism and organised crime.

However, implementation would mean that billions of bits of data would have to be monitored; in the UK alone it is estimated that this year some 60 billion text messages and 1.2 trillion emails were sent.

However, the proposal is causing alarm. Shadow Home Secretary, Dominic Grieve, said: "If the suggestion that is being reported is correct it would mark a substantial shift in the powers of the state to obtain information on individuals.

"Given the Government's poor record on protecting data and seeing how significant an increase in power this would be, we need to have a national debate and the Government would have to justify its need."

Richard Thomas, the Information Commissioner, has also previously warned that the UK is "sleep walking" into a surveillance society.

The Home Office said no decision had been taken but The Sunday Times said that more details will be unveiled next month during the Queen's Speech after ministers have agreed to the project in principle.