The private sector will be asked to manage and run a communications database that will keep track of everyone's calls, emails, texts and internet use under a key option contained in a consultation paper to be published next month by Jacqui Smith, the home secretary.

The Home Office's interception modernisation programme, which is working on the superdatabase proposal, argues that it is no longer good enough for communications companies to be left to retrieve such data when requested by the police and intelligence services. A Home Office spokeswoman said last night the changes were needed so law enforcement agencies could maintain their ability to tackle serious crime and terrorism.

External estimates of the cost of the superdatabase have been put as high as £12bn, twice the cost of the ID cards scheme, and the consultation paper, to be published towards the end of next month, will include an option of putting it into the hands of the private sector in an effort to cut costs.