Britain must provide an explanation to the European Union on whether Phorm, the controversial online advertising system that monitors web traffic, complies with data protection legislation.
The UK government has until the end of the month to respond to a letter from Viviane Reding, the EU's commissioner for information society and media, seeking clarification.
The contents of the letter, sent in mid-July, have not been disclosed.
TalkTalk and Virgin Media have signed up to use the system. BT is due to begin a wide-scale trial of the service soon, having already conducted secret trials without seeking customers' consent.
Critics called for BT to be prosecuted for breaking the Data Protection Act, but the information commissioner ruled in May that no action would be taken. However, anyone using Phorm since then has had to ask for users' consent.
Phorm insists its web-tracking systems comply with the law.
Read more on IT risk management
The US advertising industry has drawn up guidelines for online advertising in an attempt to avoid legislative action over controversial behavioural targeting...