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Webwise analyses the browsing history of internet users and uses that data to present targeted advertising. Some have questioned the legality of such a system under the Regulation of Investigatory Powers Act (RIPA).

However, the Home Office has announced that its earlier suggestion that the system could be legal to implement, as long as users opted-in should not be taken as final. The initial Home Office advice also made it clear that it was only "informal guidance" and that it should not be regarded as a "definitive statement or interpretation of the law".

"We can't comment on the legal position of targeted online advertising services. It is up for the courts to interpret the law," explains a Home Office statement given this morning.

"In response to queries from a number of parties seeking a view about issues relating to the provision of targeted online advertising services, particularly the relation to part one of the Regulation of Investigatory Powers Act 2000, we did prepare an informal guidance note. It should not be taken as a definitive

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statement or interpretation of the law, which only the courts can give," it continues.

The Foundation for Information Policy Research (FIPR) claims Phorm is using the preliminary advice given by the Home Office to prove its legality, and has issued an open letter requesting that the Home Office withdraws it.

"Your department's note can now be seen to be significantly incomplete and dangerously misleading. We call on you to withdraw it," says the open letter signed by Nicholas Bohm and Dr Richard Clayton of FIPR.

"People are rightly concerned about online privacy and other online companies are collecting, storing and using large amounts of personal data often keeping personal information for at least 13 months. Our technology, however sets a new standard - it does not store personal data," says a statement from Phorm today.

"FIPR is abusing its influence and promoting its own agenda by encouraging a frivolous debate about the legality of a legitimate e-commerce business. Internet users would be better served if FIPR focused on the benefits of the online technologies available today rather than undermine the online privacy debate and block technological progress. That would help people to make valid informed choices about the services they want to use," continues the statement from the online advertising company.

It has also emerged that both Phorm and BT failed to contact the Government to explore the legality of secret Webwise trials conducted in 2006 and 2007.

For an exclusive interview with FIPR's Dr Richard Clayton, see next month's issue of PC Pro magazine, on sale 15 May.