The UK's coalition Government is undertaking what it calls a "rapid review" of the Regulation of Investigatory Powers Act 2000 (RIPA), the law governing the State tapping of phones, email and Internet use.
The move comes as part of the new administration's wider review of counter-terrorism legislation introduced by the previous Labour administration. Its aim - the coalition claims - is to restore individual liberties.
In a statement released on Tuesday, Home Secretary Theresa May said: "National security is the first duty of government but we are also committed to reversing the substantial erosion of civil liberties.
"I want a counter-terrorism regime that is proportionate, focused and transparent. We must ensure that in protecting public safety, the powers which we need to deal with terrorism are in keeping with Britain's traditions of freedom and fairness."
Shami Chakrabarti, the director of civil rights group Liberty, which has been invited to participate in the review, said: "No one underestimates the terrorism threat, and everyone wants to see a country united, safe and free. Liberty welcomes this once-in-a-generation opportunity to reform counter-terror measures and bring them within the rule of law. We intend to do everything within our power to ensure that the Government does not waste it."
The review of counter-terrorism legislation, which was promised in the coalition's power-sharing agreement published on 20 May, will be led by Liberal Democrat peer and former director of public prosecutions, Lord Ken Macdonald QC.
In addition to examining the surveillance activities of central government, the review will look at the ways in which RIPA has been used by local authorities to crack down on offences such as dog fouling or fly tipping.
The Home Secretary is due to report back on the reviews findings in the autumn.