The British government already has spent $2 billion on the first stage of an enormous database -- estimated to cost up to $24 billion if completed, The Sunday Times of London reported.

British intelligence officials now conduct a limited spying operation on e-mail and Internet communications approved case-by-case by the home secretary, the Times reported.

The enormous scope of the new anti-terrorism plan is sure to spark a backlash from privacy advocates who will view the plan as "extremely sinister," said Dominic Grieve, the shadow home secretary.

A spokesman for the Home Office said while no formal decision has been made, ministers already have agreed "in principle" to the program, to be unveiled in a speech by the queen in November, the Times reported.