Phorm has been ordered to make it easier for UK web surfers to opt-out of its controversial ad-targeting system, while future trials of the scheme will only be given the go-ahead if customers agree to them.

That's the verdict of a government investigation into Phorm's Webwise technology, which tracks a person's online history to deliver targeted advertisements related to the content the person has viewed. But the investigation, undertaken in response to a request from the European Commission, found that the system could continue to be rolled out in the UK and that it was "capable of being operated in a lawful, appropriate and transparent fashion".

The European Commission asked the UK government to look into Phorm in July, when it sent a request to the UK's Department for Business Enterprise and Regulatory Reform (BERR). The department has consulted other UK agencies, such as the Home Office and the Information Commissioner's Office, over the past two months, and decided that there's no inherent reason why Phorm shouldn't be allowed to continue to operate.

However, BERR said any profiling of web surfers must be done "with the knowledge and agreement of the customer".

Phorm has backed the decision, saying that the government's position on the technology "reflects our common commitment to transparency and superior standards of online privacy".

"We also believe that revolutionary technologies should be introduced in line with stringent criteria. For instance, our unique 'privacy by design' approach means our internet advertising and online fraud protection system stores no personally identifiable information or browsing histories," said Phorm in a statement.

As well as insisting that user profiling occurs with the knowledge and agreement of the customer, BERR released the following recommendations:

- The profile is based on a unique ID allocated at random which means that there is no need to know the identity of the individual users

- Phorm does not keep a record of the actual sites visited

- Search terms used by the user and the advertising categories exclude certain sensitive terms and have been widely drawn so as not to reveal the identity of the user

- Phorm does not have nor want information which would enable it to link a user ID and profile to a living individual

- Users will be presented with an unavoidable statement about the product and asked to exercise a choice about whether to be involved

- Users will be able to easily access information on how to change their mind at any point and are free to opt in or out of the scheme

See also:

Protesters call bad 'Phorm' outside BT meeting

BT struggling with controversial Phorm trials

Phorm CEO: We can revolutionise advertising

New online ad system 'spooky but safe'