Mr Straw used a visit to the European Parliament to call for anti-terrorism plans to be implemented more quickly.

Fears of the cost of keeping records were exaggerated, he argued, and phone and internet companies were not the world's "most impoverished" firms.

But some MEPs argue the move would be too heavy a burden for some companies.

Improving protection

Mr Straw's appearance before the European Parliament's foreign affairs committee came as Chancellor Gordon Brown urged EU finance ministers to step up efforts to seize the assets of terrorist groups.

And at a special summit being held on Wednesday in the wake of the London bombings, Home Secretary Charles Clarke will call for the new rules on phone and internet records.

Mr Straw told the MEPs: "I believe that provided there are proper safeguards that no one's civil liberties are threatened by retention and access to data, but the protection of everybody is more greatly enhanced."

In a news conference after the hearing, the foreign secretary said he understood concerns about civil liberties.

But he asked MEPs to realise a "new balance" was needed and they should remove the "blockages" to the data retention move.

Mr Straw said the costs of the move were not as high as critics suggested and some phone companies and internet service providers already kept the records.

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"There may be some costs but it is surely a cost we ought to pay for the preservation of human life," he said.

Time limits?

The victims of last week's bombings would include citizens of countries across the EU, added Mr Straw.

The data retention idea was discussed after last year's train bombings in Madrid.

On Monday, Labour MEP Claude Moraes, who sits on the European Parliament's civil liberties committee, objected to the plans on the grounds of cost.

"You're talking about millions and millions of e-mails and telephone calls and so on. So even medium size internet providers or phone operators would find this quite crushing," he told BBC News.

But EU security commissioner Franco Frattini said he believed Europe-wide measures were needed to ensure firms retained details - but only for a limited time.

Contents exempt

Mr Frattini told BBC News: "We should guarantee the full traceability of the movements of terrorists through the stage of phone calls, including unsuccessful phone calls, but of course for the appropriate period of time.

"I think, for example, a period of six months for internet data and about 12 months for phone calls."

Mr Frattini said it was a great advantage for terrorists if there was no possibility of retaining data in some EU states.

The UK has a voluntary code of practice which sees communication companies retaining details about, but not the content, of phone calls, e-mails and text messages.

Mr Clarke wants the whole of the European Union to adopt similar measures.