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She warned that police and security services would have to consider a "massive expansion of surveillance", but said that the plan would not include recording the contents of ordinary citizens' messages, and that appropriate safeguards would be put in place.

However, her announcement is likely to prompt fears of a "Big Brother" database watching people's every online move.

Smith announced that a consultation will begin in the new year, and claimed that changes were "vital" to maintain Britain's capacity to combat terrorism.

"There are no plans for an enormous database which will contain the content of your emails, the texts that you send or the chats you have on the phone or online," she said.

"Nor are we going to give local authorities the power to trawl through the database in the interests of investigating lower level criminality under the spurious cover of counter-terrorist legislation."

She said she hopes the changes will "enable us to maintain a capacity that is fundamental to our ability to combat not just terrorism but organised crime as well".