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The City of London Police has questioned representatives from the company, although its jurisdiction only covers crimes that affect those who reside or work within London's financial district.

"City of London Police has not launched a criminal investigation in connection with this matter. We are establishing if any criminal offence has been committed," says a City of London Police spokesperson, who declined to comment on the likelihood of any criminal proceedings.

BT and Phorm have previously conducted two secret trials of the

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Webwise advertising system which observes the browsing habits of internet users in order to present targeted advertising on commercial websites.

Complaints were raised by affected customers and privacy advocates, but the Information Commissioner's Office announced that it would be taking no further action.

BT has admitted that it is planning another trial with Phorm, claiming in June that it was to begin imminently. At the time Phorm said that it would be ready to go with only 24 hours notice. However, news emerged last week that preparations for the trial had been delayed.

As well as the investigation by the City of London Police, the EU has also taken an interest in the case. The EU commissioner Viviane Reding wrote to the UK Government in mid-July, asking it to clarify the legal position of Phorm's Webwise in regard to EU law.

BT was unwilling to comment on the investigation this morning, but was confident that it would be pressing ahead with its plans regarding Phorm's Webwise system.

"We are definitely going to be going ahead with the trial," says Adam Liversage, chief press officer at BT.