BT has been slammed for engaging in a "potentially illegal" trial of a privacy-invading online ad system without offering any warning to its customers.

BBC News reports that BT's trial of a new ads system called Phorm was conducted among 30,000 BT customers without warning. Phorm is a system which attempts to match advertisements to user's web habits.

In order to test the system, BT used private data belonging to its customers to customise the ads served - a clear violation of data protection law as the customer's were never informed that their information would be used in this way.

Nicholas Bohm, of the Foundation for Information Policy Research, told the BBC these tests without the knowledge of users were "an illegal intercept of users' data".

Virgin Media and Talk Talk are also due to deploy the technology and there is no suggestion that the two companies have trialled the system in the past.

The Foundation for Information Policy Research has written to the Information Commissioner to argue that Phorm contravenes the Regulation of Investigatory Powers Act 2000 (Ripa), which protects users from unlawful interception of information.