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"Phorm products will have to operate on an opt-in basis to use traffic data as part of the process of returning relevant targeted marketing to internet users," says a new statement from the ICO, which will come as a blow to the controversial advertising company.

Phorm operates a system which provides more accurate targeted advertising to users by observing their browsing history<

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to build up a profile on their interests. BT, Virgin Media and Carphone Warehouse already have deals in place with the company.

The ICO statement goes on to say there are legal ways in which the system could operate, and will observe initial trials before making any further judgments.

"The Commissioner will keep the Phorm products under review as they are rolled out and his view will be strongly influenced by the experience of those users who choose to participate in any trials and the way in which they are able to make that decision," says the statement.

Earlier this week the ICO gave another statement that the Foundation of Information Policy Research (FIPR) said gave a "green light for lawbreaking", by allowing trials of the system to take place.

Phorm was unavailable for comment at the time of writing, but is holding a public meeting next week that PC Pro will be attending. If you have any questions that you would like posed to Phorm, please leave them in the comments and we will do our best to get as many as possible answered.