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David Cameron abandoned his year-long resistance to tightening the accountability of the security services as the price for winning Liberal Democrat and Labour support for emergency surveillance laws.
Standing alongside Nick Clegg, the prime minister unveiled emergency laws, to be bundled through parliament in days, designed to shore up the powers of spies, police and government agencies. But Cameron agreed to a "sunset clause" time-limiting the bill to 2016, a full-scale review of intercept laws, a new oversight board and restrictions on the number of public bodies that can make use of surveillance data.
Ministers said the apparent sudden need for new laws stemmed partly from a European court of justice (ECJ) ruling in April restricting state access to citizens' data. They also warned that foreign-based phone and internet companies were imminently going to stop handing over the content of individual communications in response to UK warrants.
Theresa May, the home secretary, told the Commons: "Without this legislation, we face the very real prospect of losing access to this data overnight, with the consequence that police investigations would suddenly go dark and criminals would escape justice."
In a day of political drama that began with an 8am cabinet meeting, Cameron said the security services were "on a cliff edge". He added: "I am simply not prepared to be a prime minister who has to address the people after a terrorist incident and explain that I could have done more to prevent it."
The new data retention and investigation powers bill (DRIP) will reassert the duty of internet firms to retain most data, including emails, texts and phone data, for up to 12 months.
Civil liberties campaigners, including the Labour MP Tom Watson, said "a last-minute stitch-up by the elite" meant laws would be passed in days next week that might expand, rather than simply shore up, the presupposed powers of the security services.
David Davis, the former Tory minister, said it was a predictable emergency since the ECJ judgment was made on 8 April.
Further questions were raised when communication service providers said they did not know of any companies that had warned the UK government they would start deleting data in light of the legal uncertainty.
Ministers said they had needed the time to study the ruling, and agree whether primary or secondary legislation was needed, before Thursday's announcement. They added that the emergency laws would cease to apply in 2016, requiring parliament to pass fully considered laws within the next 18 months. Lawyers, including the Law Society, studying the complex interaction of the draft new law, the ECJ ruling and existing UK surveillance laws argued that more than a week was needed for parliamentary scrutiny.
Yvette Cooper, the shadow home secretary, also expressed her unease at the plan to pass the six- clause bill in one day in the Commons on Monday and two days in the Lords. She said: "It risks undermining confidence for issues as important as this to be left until the last minute and rushed through on an emergency basis rather than being given more time."
However, in behind-the-scenes negotiations – first between the Conservatives and Lib Dems in government, and more recently with Ed Miliband – Cameron has been forced to make significant concessions in the aftermath of revelations about wide-ranging internet surveillance by UK and US spy agencies as revealed in the files leaked by Edward Snowden. No 10 conceded that it was neccesary to:
• Introduce a new privacy and civil liberties oversight board to scrutinise the potential impact of all terror laws on privacy and civil liberties. The new expert watchdog stiffens a system in which the public rely on assurances from commissioners.
• Restrict the number of bodies, including councils and Royal Mail, that can directly contact phone companies and demand access to data, such as the time of the phone call and the identity of the person called.
• Conduct a wide-ranging review overseen by David Anderson, the independent reviewer of terrorism legislation, into the Regulation of Investigatory Powers Act, the vehicle that allow security services to access the content of phone calls, texts and emails. That review, Labour said, "will look into how different levels of safeguards and limits for domestic and foreign intelligence apply in light of communication technologies that send domestic messages via international servers".
Both Labour and Lib Dems said the wording opens the door into an investigation into whether the US National Security Agency or GCHQ eavesdropping centre in Cheltenham have been circumventing the warrant system approved by parliament by using technologies to hoover up information from communications traffic.
Cameron also agreed to the appointment of a senior retired diplomat to open talks with the US to reach agreements on the transfer of data between the two jurisdictions. Some US-owned communications companies believe they are being put under conflicting legal pressures with their British-based firms being handed UK warrants to divulge data secretly that US law debars them from doing.
Clegg said he was persuaded of "the need to act and to act fast", but added: "This gives us the chance to kickstart a proper debate about civil liberties in the post-Snowden era, including how nation states grapple with globalised internet."
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