The Labour government is looking to make the UK a world leader in e-commerce, through its Electronics Communications Bill. Microsoft has already dubbed the Bill "the model for Europe".

A Home Office spokesperson said: "Britain led the world in the first Industrial Revolution. Now we are determined to be winners in the new knowledge economy revolution. The government is creating the conditions in which UK businesses can thrive and where the UK becomes first choice for investors."

The Bill is set for Royal Assent by April 2000.

The legislation will create a framework to give electronic signatures legal recognition, offering a secure alternative to paper-based signatures. A kite-marked self-regulatory system will be established, maintaining minimum standards of quality and service. Citizens will be able to check an email’s origin, security and privacy.

If self-regulation works, the government will not introduce a statutory scheme. If it fails, though, one will be introduced over the next five years.

One stumbling block that has been removed from the Bill – in the face of mounting pressure from IT professionals – are measures regarding mandatory key escrow. In its original form this meant those using encryption would be required to hand over their encryption key to law enforcement agencies. This would have been 'in case of', rather than 'because of' criminal activity.

Home Office Minister Charles Clarke said: "Encryption is a double-edged sword: it’s vital to the e-commerce revolution but can be a weapon in the hands of criminals, who already use encryption to evade justice. We need to modernize police powers to enable them to read such material.

"The government will provide law enforcement agencies with new powers to access decryption keys and the plain text of lawfully obtained material under properly authorized procedures.

"We have decided to take the measure forward this session in the Investigatory Powers Bill instead of the Electronic Communications Bill."

Industry approval Key industry figures have welcomed the Bill.

AOL’S Karen Thoson said: "Giving legal recognition to electronic signatures enhances confidence in the Net".

Carl Symon, of IBM, said: "It’s clear from the Bill that the Government has listened very closely to what industry has had to say."

Keith Todd, chief executive of ICL, said: "The separation of legitimate commerce issues from the law enforcement one is particularly welcome, because it shows that the government is listening to what industry wants.

"ICL is contributing to the Alliance for Electronic Business in the development of the self-regulatory scheme, which will satisfy the requirements of Part 1 of the Bill. This new sense of partnership between industry and government will make the UK a great place for electronic commerce."

Keith Chapple, managing director of Intel UK, said: "We are delighted that government has confirmed that key-escrow is off the agenda, and is focusing on the real issues. Legal recognition of electronic signatures will give a vital boost to business and consumer confidence and promote the growth of electronic business in the UK."

The Government says the Bill will include powers to modernize the cumbersome and outdated procedures regarding telecom licences.

The Bill can be read in full at the Houses of Parliament Web Site. The Department of Trade and Industry has also published a summary of responses to the consultation on the draft Bill.