ISPs may be forced to relocate servers out of reach of wide-ranging new snooping powers given to police in the Anti-Terrorism Bill and Regulation of Investigatory Powers Act (RIPA).

That is the warning from ISPs concerned that law enforcement agencies will be able to use clauses in RIPA to access traffic data stored because of measures in the Home Secretary, David Blunkett's Anti-Terrorism bill.

Under sections of RIPA, yet to be enacted, the National Criminal Intelligence Service, Customs and Excise, the National Crime Squad, GCHQ and the Inland Revenue will be allowed to access data stored by ISPs for wide-ranging reasons, including national security, crime prevention, and collecting tax.

Steve Rawlinson, managing director at London-based ISP ClaraNet claims the sweeping powers will force ISPs to locate more hosting infrastructure outside the UK to guarantee confidentiality of communications data for business customers.

"We don't have a problem helping fight terrorism but the police will now be able to pop round whenever they want," he said.

"We have customers specifically asking to locate their sites outside the UK. The numbers are not high but they are significant customers in financial services that conduct transactions their clients regard as confidential," Rawlingson added.

But the government claims the data retention proposals announced last month were never meant to be restricted to anti-terrorist cases.

"The government has always referred to the fact this will enable communication service providers to retain data to be accessed by law enforcement investigations not just in anti-terrorist investigations," said a Home Office spokeswoman.

Police will also not have carte blanche to trawl through ISP customer records, she said.

"Access to the data will be governed by the strict regulations of RIPA. Agencies will not be able to go on fishing expeditions or mass trawls. The legislation sets out clear limits."

Industry body the Internet Service Providers Association (ISPA) said it is awaiting more details from the Home Office as questions still remain about the workability of the proposals, the cost to ISPs of storing the data and the actual usefulness of it to any police investigation.