Intel has caved in to pressure from privacy groups over the internet tracking technology to be included in its forthcoming Pentium III processors.

Privacy champions called for a boycott on all Intel products until the company removed the technology, which can track users as they surf the internet. The system can verify processors' IDs by transmitting a unique serial number on the chip to make credit card transactions more secure.

The groups, which include Washington-based Electronic Privacy Information Centre (Epic) and UK-based Privacy International, claim that the technology could be used to aid Intel's marketing and is a violation of privacy.

Intel said that in a move to quell any user concerns over privacy issues, it will offer the choice of whether or not they utilise the technology.

Originally, Intel had planned that the technology would be automatically on and users would need to deactivate it - now the company has said the default would be switched to permanent off and customers would need to activate the utility themselves.

A spokesman for Intel said the groups are confusing privacy with security.

"We still don't acknowledge that it is a privacy issue, but this move is intended to address any concerns the public may have.

"All the technology is, is a serial number built into the processor like that on a car engine. Sites that conduct e-commerce will have the ability to read this number and it will be linked with a user's credit card number.

This means that if a credit card is stolen, then the thief would not be able to buy goods with that card from any other PC," he said.

Intel sees the technology as a way of helping network managers to control access to computing resources. Linking specific software to specific machines will also help prevent software piracy.

Despite Intel's move, privacy groups said they will continue the boycott on all Intel products until the technology is completely removed.

The Intel spokesperson accused the groups of over-reacting: "Cyrix has announced it will include the technology on its chips and AMD is evaluating it. Are they going to boycott every microprocessor? Soon web sites will make it mandatory for users to have this verification technology in order to buy from their sites."

He also said Intel would be adding random number generators into the Pentium III chipset to further boost its security functions.

However, Dave Banisar, policy director for Epic, said he believed the technology is reminiscent of computer tracking in the Soviet Union. "It is also a new version of the cookies that everyone hates. We feel that Intel should change its marketing slogan from 'Intel inside' to 'Big Brother inside'. We will keep the boycott until Intel drops this technology," he said.