Civil liberties groups have criticised plans for the government to be able to monitor the calls, emails, texts and website visits of everyone in the UK.
Internet firms will be required to give intelligence agency GCHQ access to communications in real time under new legislation set to be announced soon.
Tory MP David Davis called it "an unnecessary extension of the ability of the state to snoop on ordinary people".
The Home Office said the move was key to tackling crime and terrorism.
Attempts by the last Labour government to take similar steps failed after huge opposition, including from the Conservatives.
A new law - which may be announced in the Queen's Speech in May - would not allow GCHQ to access the content of emails, calls or messages without a warrant.
'Civilised society'
But it would enable intelligence officers to identify who an individual or group is in contact with, how often and for how long. They would also be able to see which websites someone had visited.
Conservative backbencher and former shadow home secretary David Davis said it would represent a "very big widening of powers" which would cause a "lot of resentment".
Anyone wishing to monitor communications up to now had been required to gain permission from a magistrate, he told the BBC, and this would make it easier for the government "to eavesdrop on vast numbers of people".
"What this is talking about doing is not focusing on terrorists or criminals, it's absolutely everybody's emails, phone calls, web access. All that's got to be recorded for two years and the government will be able to get at it with no by your leave from anybody."
Mr Davis compared the idea to measures introduced by the Labour government - such as longer periods of pre-charge detention, extended stop and search powers and new extradition arrangements with the US - which he said were justified at the time on security grounds but had proved to be damaging.
'Attack on privacy'
Nick Pickles, director of campaign group Big Brother Watch, called the move "an unprecedented step that will see Britain adopt the same kind of surveillance seen in China and Iran".
"This is an absolute attack on privacy online and it is far from clear this will actually improve public safety, while adding significant costs to internet businesses," he said.
Shami Chakrabarti, director of Liberty, added: "This is more ambitious than anything that has been done before. It is a pretty drastic step in a democracy."
The Internet Service Providers Association said any change in the law must be "proportionate, respect freedom of expression and the privacy of users".
Even if the move is announced in the Queen's Speech, any new law would still have to make it through Parliament potentially in the face of opposition in both the Commons and the Lords.
The previous Labour government attempted to introduce a central, government-run database of everyone's phone calls and emails but eventually dropped the bid after widespread anger.
The then Home Secretary Jacqui Smith did pursue efforts similar to those being revisited now, but the Conservatives and Liberal Democrats continued to voice their concerns.
The shadow home secretary at the time, Chris Grayling, said the government had "built a culture of surveillance which goes far beyond counter-terrorism and serious crime".
Chris Huhne, then the Lib Dem home affairs spokesman, said any legislation requiring communications providers to keep records of contact would need "strong safeguards on access".
In a statement, the Home Office said action was needed to "maintain the continued availability of communications data as technology changes".
"It is vital that police and security services are able to obtain communications data in certain circumstances to investigate serious crime and terrorism and to protect the public," a spokesman said.
"As set out in the Strategic Defence and Security Review we will legislate as soon as parliamentary time allows to ensure that the use of communications data is compatible with the government's approach to civil liberties."
'Saving lives'
Lord Carlile, the former official reviewer of terrorism legislation, said the proposals were not new but rather an "updating of existing practices".
"The previous government intended to take similar steps and they were heavily criticised by the coalition parties," he said.
"But having come into government, the coalition parties have realised this kind of material has potential for saving lives, preventing serious crime and helping people to avoid becoming victims of serious crime."
There must be independent scrutiny of any increased powers given to the police and the security services, he said.
"Parliament will apply the most anxious scrutiny to any proposed legislation of this kind... what we have to protect the public from is arbitrary action by the government or any government authority."
But Professor Anthony Glees, director of the Centre for Security and Intelligence Studies at the University of Buckingham, said there "were a lot of dangerous people out there" and the police needed to lawfully "keep up with the massive flow of information out there on Facebook and the internet".
"If it can prevent criminal activity and terrorism in an Olympic year then we should certainly be doing it," he told BBC Radio 4's Today.
SOURCE: BBC
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