The Commons home affairs committee has questioned the legality of £1.2bn Home Office e-borders project to track the movement of passengers in Britain.
The MPs' report says the information on passengers travelling within Europe that the project requires companies to collect may be illegal under the EU treaty.
The system requires transport operators to collect, on the agency's behalf, a wide range of data including travellers' contact details and itinerary, known to airlines as passenger name records. The committee adds that requiring such data is also problematic under the national data protection laws some European countries', such as Germany.
Airlines in Europe have boycotted the programme in absence of legal clarity. However, the borders and immigration minister, Phil Woolas, said he was confident that e-borders was fully compliant with EU law.
The Home Office has been informed to seek an opinion from the European Commission as to the legality of e-Borders' use within Europe, and report back by the end of February. In the meantime, it must put on hold proposals to extend the system to new routes within the EU.
The Home Office responded that the Commission is happy with the legality of the system. "e-Borders is fully compliant with EU law and this has been confirmed by the European Commission," said Woolas.
Committee chairman Keith Vaz said the agency had made some progress on technical problems with e-Borders. "But the major stumbling block, and a very disappointing oversight, is that we are sure that what the programme requires will be illegal under the EU Treaty.
"Until this legality is resolved UKBA must just halt any further work to 'go live' on intra-EU routes. We cannot have another massive IT project which flounders or is even abandoned at huge cost to the taxpayer. It is simply unacceptable," he added.
Conservative shadow immigration minister Damian Green commented: "It beggars belief that after so many years of pursuing this project the government still isn't sure whether it is even legal. Over a billion pounds of taxpayers' money has been spent on e-Borders and yet many of the most basic problems have not been resolved."
• Update: the government is reported to have made the e-Borders scheme voluntary for those travelling from elsewhere in Europe, to satisfy the European Commission of its legality, according to latest media reports.
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