The government's plans to regulate ecommerce were hit today by a threat of a legal challenge, marking an embarrassing start to the national ecommerce week launched by Prime Minister Tony Blair.

Two pressure groups believe that aspects of the planned electronic communications bill contravene the European Convention on Human Rights and could easily be struck down in the courts.

In question are the powers given to police to demand the decoding of encrypted data.

Nick Bohm, an ecommerce lawyer and legal officer for one of the groups, IT think tank the Foundation for Information Policy Research, said the bill "was very likely to be in breach of the convention. The government has a serious problem on its hands."

Bohm added that if the bill - currently in draft form - remained unchanged, mounting a legal challenge in the UK courts was "a serious possibility". He added that virtually any user of encrypted email would have the right to do so.

The bill, which will begin its progress through parliament following the Queen's Speech in November, also clarifies the legal basis of digital signatures and creates a self-regulatory scheme for encryption providers. Neither of these are affected by the possible challenge.

Underlying the confidence of the pressure groups, the second of which is human rights legal group Justice, is a legal opinion from the Cambridge professor of English law, Jack Beeston QC, and barrister Tim Eicke.

They concluded that "there are serious concerns about the compliance of the bill with the European Convention." This is because the bill insists that encryption users are forced to disclose encryption keys - a breach of the right not to incriminate oneself - or forced to prove they do not have a relevant key - a difficult task which can effectively breach the right to be presumed innocent.

The Home Office disputes these concerns: "We don't believe that the relevant sections of the bill are in breach of the convention."

One observer, who helped draw up the original policy that led to the draft bill, said such problems should now lead to the whole section of the bill dealing with encryption regulation, part three, to be removed. That part should be placed in a separate bill also expected in the Queen's Speech to reform telephone tapping laws.

Jim Norton, head of ecommerce policy at the Institute of Directors, said: "I would urge the government to split the electronic communications bill in two so that there are separate bills for electronic commerce and law enforcement."

"Challenges such as these can only increase the desire of government to have two clean bills."