The draft directive on the protection of personal data, which was due to go before an EU committee as Computer Weekly went to press, requires that businesses provide "advance information" before cookies - tools used by advertising and e-commerce industries to track users' Internet habits - are served.
This was a change imposed by the European Council, made up of heads of government and ministers from member states to a previous wording proposed by the European Commission (the civil servants) which had been broadly accepted by online traders. The commission had only required that publishers and Web site owners provide clear information to users to enable them to "opt-out" of cookies if they wished.
The industry group, led by the Interactive Advertising Bureau (IAB), said UK and European companies will face massive Web site re-engineering costs if the legislation is passed. In addition, the group said, EU companies will be unable to compete on a level playing field with non-EU rivals.
Danny Meadows-Klue, chairman and chief executive of the IAB, said the EU has failed to understand the costs and mechanics that restrictions on cookies will produce.
"If the European Commission forces through this legislation it will shoot itself in the foot," he said.
"It would become a burden to industry and would fly in the face of many national governments' strategies to get more users online and develop e-business further."
Meadows-Klue said it is in the UK government's interest to support the group in its bid to get the proposed legislation changed.
"Restricting cookies will hamper our own government's UK Online initiative and its stated aim to give everyone access to the Internet by 2005," he said.
"Similarly across Europe thousands of companies and national institutions will be affected by massive re-engineering costs. We need UK ministers to support us and understand the damage European legislation would do," Meadows-Klue said.
Background to the cookie debate
MEPs at the European Parliament branded cookies a "spy device" and insisted that users must give "explicit, prior consent" every time a cookie is served to a PC.
Industry bodies said this would have a number of consequences, including users being bombarded with consent messages and advertising, or at worst, forcing them to pay for content.
The Interactive Advertising Bureau, a non-profit organisation devoted to maximising the use and effectiveness of Internet advertising, believes any change in the law would lead to Internet users having to re-register or re-enter preferences every time they revisit a site - putting them off e-commerce and the Web.
This, the Interactive Advertising Bureau said, would force many commercial Web sites to restructure and rebuild their sites at massive cost.