The directive proposes the storage of data of fixed and mobile phone calls for one year and of internet traffic for six months.

The data would concern information on the caller's and the receiver's numbers, or in the case of email traffic, IP addresses - but not the actual conversations or email contents.

Data on web pages visited are also excluded from the scheme.

Commissioner Frattini said that the data is to be kept for "strict purposes of investigating terrorism and crime", adding that retention is "essential" in the fight against terror.

A majority of member states currently do not oblige telecoms operators to store data.

Commissioner Frattini commented that Europe could not allow "safe havens" to exist where terrorists could "escape due to 25 different regimes".

Moves towards compulsory data retention have been under severe criticism from some MEPs and human rights groups on the grounds that they infringe citizens' rights to privacy.

But commissioner Frattini stated that there were "two fundamental rights" involved in the issue.

"One is the right to security of life", he said. "This is why the EU needs better instruments to investigate terrorism". "The other one is the right to privacy".

As regards privacy, Mr Frattini said the commision's draft law was "transparent" and its implementation of the directive was "under the full control of national authorities".

Two competing initiatives

The Commission's move comes after the Council - the 25 EU member states - recently launched its own competing data retention scheme in the form of a "framework decision".

In the immediate aftermath of the Madrid terror attacks in April 2004, the UK, Sweden, France and Ireland proposed a data retention plan which resulted in the council's framework decision.

The UK presidency after the recent London attacks put its full weight behind the council's draft law.

The council's text notably differs from the commission's draft law in that it proposes a minimum period of retention of one year for all categories - phone calls and email - providing for possible extensions of the period for up to four years.

The commission, but also the council's own legal service, question the legality of the council's initiative, as it makes use of the "third pillar" structure which in EU decision-making completely sidelines the European Parliament.

A commission spokesman told EUobserver that "justice and home affairs ministers were under pressure to act swiftly against terrorism, but the council has now entered risky legal territory".

The commission's draft law is to be submitted to the European Parliament under the "first pillar" structure.

Although a number of MEPs are known to be critical about data retention, commissioner Frattini said "I am dedicated to working on a co-decision basis with the European Parliament and the member states in the council, and in particular its UK presidency, to try to reach an agreement on this issue before the end of this year - counter terrorism effectively requires that we have no time to lose".

Other anti-terror measures

Commissioner Frattini also presented other EU initiatives in the fight against terror.

The EU executive has allocated €7 million for a "pilot project" stimulating terrorism prevention, preparedness and response.

Cash will be spent on mobilising, preparing and informing the public on terrorism, and on integrating European expertise, but most funds (€5.4 million) will flow to programs securing "critical infrastructure" - such as key transport and energy facilities.

Moreover, the commission presented its view on the causes of terrorist recruitment and violent radicalisation.

Commissioner Frattini stressed the need for banning TV stations inciting terror from European territory.

France recently prohibited a station used by terrorist group Hizbullah from airing broadcasts in its territory.

"This is not about limiting the freedom of the press - this is about dealing with activities which are already prohibited like inciting violence", the commissioner commented.

Apart from repressive measures, the commission also calls for the enhancement of inter-religious dialogue and the promotion of inter-cultural understanding.