The EFF has advised users to avoid the application because a feature known as Search Across Computers "greatly increases the risk to consumer privacy".
The EFF is a not for profit organisation that aims to protect civil liberties in the networked world.
Google launched Google Desktop version 3 on Thursday. One of the application's new features is the ability to search for documents including text files, PDFs and spreadsheets stored on any of the user's computers.
To enable this feature, the application temporarily stores copies of a user's documents on a Google server.
Security experts at Kaspersky Lab warned that hackers are now more likely to launch phishing attacks in an attempt to obtain users' Google account passwords.
"If an attacker can obtain your Google log-in details they will be able to access your confidential files," the company noted on its blog. It has advised users not to use the technology.
The EFF warned that creating a central repository with user files would make Google vulnerable to subpoenas from government and private litigants, as well as provide a "one-stop-shop" for hackers who have obtained a user's password.
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