Charles Clarke is calling for a rethink on deportation laws

Without such measures, European states would be fighting terrorism "with both hands tied behind our backs", he said.

Mr Clarke said telecommunications data proved valuable in the investigation of the London bombings.

He rejected complaints about intrusion into privacy, saying there must be effective protection against abuse.

No rules

Mr Clarke also said laws preventing suspects being deported to places where they faced persecution might have to change.

He said he wanted judges to realise of "circumstances in the modern world" when they judging cases involving European human rights laws.

It's very important when we consider how to protect ourselves against those who seek to threaten us Charles Clarke

He has not spelt out how long companies should be required to keep records but said "the longer it is held, the better".

EU Justice Commissioner Franco Frattini has said internet data could be kept for six months and phone call details for 12 months across Europe.

In some member states, he said, there are no data retention rules at all.

'Safeguards'

Mr Clarke hopes to reach a consensus by the end of the UK's EU presidency in December.

In a speech to the European Parliament, Mr Clarke said countries could only fight terror effectively if they knew what the terrorists were saying to each other.

All measures had to be proportionate, with "appropriate safeguards" against abuse and a clear legal basis for exchange of information in each case.

"They will not lead, as some have argued, to the mass surveillance of our citizens or to unnecessary invasion of the citizens' right to privacy," he insisted.

He also wants biometric information included on driving licences across Europe but he acknowledged the timescale for the change would be "enormous".

MEP resistance?

Mr Clarke said he had received "strong vibrations" about the possibility of a deal on the terror measures.

But Charlotte Cederschiold, a member of the European Parliament's justice and human rights committee, said there was "extreme hesitancy" among MEPs.

The European telecommunications industry will oppose the plans when EU justice ministers in Gateshead later on Wednesday.

The industry says the plans are disproportionate, expensive and ineffective.

Torture concerns

The Home Office says the costs are acceptable.

It has published dossier saying that a UK Government-funded project by a mobile phone company to keep data for 12 months had cost �875,999 (1.291m euros).

This compared with the cost of murder investigation forensics which could top �500,000 (737,000 euros), it says.

Mr Clarke's dossier also calls for a rethink of the European Convention on Human Rights (ECHR).

The convention prevents terror suspects being deported back to countries with poor human rights records.

Mr Clarke says the British judiciary should respect controversial deals being sought with other countries to allow deportation despite poor human rights records.

Critics say such deals cannot guarantee that deported people will not be tortured.

Lib Dem MEPs leader Graham Watson said the human rights convention should not be changed in a "spasm" from recent events.