The Home Office has been accused of colluding with online ad firm Phorm on "informal guidance" to the public on whether the company's service is legal.
E-mails between the ministry and Phorm show the department asking if the firm would be "comforted" by its position.
The messages show Phorm making changes to the guidance sought by the ministry.
Lib Dem Home Affairs spokeswoman Baroness Sue Miller, who has questioned the Home Office about Phorm, said the e-mails were "jaw dropping".
No-one from the Home Office was immediately available for comment.
The e-mail exchanges were released under a Freedom of Information (FOI) Act request made by a member of the public and sent to the BBC.
More information
The exchanges between the Home Office and Phorm date back to August 2007, in which the ministry asks the company for more information about the technology following a request made by Phorm for a view on its technology.
The Home Office has said previously that exchanges were about helping the department understand "public safety considerations and legal obligations" about behavioural advertising in general.
Phorm serves up adverts related to a user's web browsing history that it monitors by taking a copy of the places they go and search terms they look for. Adverts related to that history are put on any websites that have signed up to use Phorm.
So far BT has signed up to use the system, and carried out a series of trials, some of which were conducted without the consent of its users, sparking an outcry among privacy advocates.
The European Commission has also separately started legal action against the UK over the use of Phorm.
The commission said Phorm "intercepted" user data without clear consent and the UK needed to look again at its online privacy laws in order to better protect consumers.
E-mails from legal representatives of Phorm released under the FOI Act show the company repeatedly asking the Home Office if it "has no objection to the marketing and operation of the Phorm product in the UK".
Advertising platform
The Home Office has denied that it has provided "any advice to Phorm directly relating to possible criminal liability for the operation of their advertising platform in the UK".
However, e-mail exchanges over a series of months between the department and the firm show the Home Office asking the firm what it thinks of the advice it is drawing up in relation to behavioural targeted advertising, and making specific reference to Phorm's technology.
In an e-mail dated August 2007, an unnamed Home Office official wrote to Phorm's legal representative and said: "My personal view accords with yours, that even if it is "interception", which I am doubtful of, it is lawfully authorised under section 3 by virtue of the user's consent obtained in signing up to the ISPs terms and conditions."
In an e-mail dated 22 January 2008, a Home Office official wrote again to Phorm and said: "I should be grateful if you would review the attached document, and let me know what you think."
Some e-mails were sent from the Office of Security and Counter Terrorism at the Home Office.
Making deletions
In January 2008 the Home Office thanks Phorm for comments and changes to its draft paper, which show the company making deletions and changes to the document.
The Home Office official wrote to Phorm: "If we agree this, and this becomes our position do you think your clients and their prospective partners will be comforted."
Baroness Sue Miller, Liberal Democrat spokeswoman on Home Affairs, told BBC News: "My jaw dropped when I saw the Freedom of Information exchanges.
"The fact the Home Office asks the very company they are worried is actually falling outside the laws whether the draft interpretation of the law is correct is completely bizarre."
She added: "I couldn't be more surprised [that] the very department drawing up policy to protect people's privacy is being that cynical.
"Anything the Home Office now says about Phorm is completely tainted."
Baroness Miller said the Home Office most likely consulted Phorm because "they didn't have the capacity to understand the technology they are dealing with".
"But there people in academia with that knowledge," she added.
In a letter to the Guardian responding to an article written by Baroness Miller, Phorm's chief executive Kent Ertugrul denied there was any "collusion" between the firm and the Home Office.
He wrote: "This is untrue and misrepresents the way in which the British legal system works."
He said the advice given by the Home Office was "an informed opinion on ISP-based targeted advertising, but in the United Kingdom it is for the courts to decide what is or is not legal, not the Home Office".
Baroness Miller said she was concerned that the Home Office was "very interested in the technology" for its own purposes.
However, Mr Ertugrul said it was "misleading to invent a link between Phorm's innovative technology and the Government's plans for counterterrorism".
Phorm has consistently defended its technology, saying it offers greater privacy protection than rival systems, and that it could help generate fresh sources of advertising revenue for websites.
The company has also stressed it believes consumers will benefit because they would receive more relevant adverts.
The company has launched a website, which it says is aimed at stopping the "orchestrated smears" against Phorm.
Jim Killock, executive director of privacy campaigners, the Open Rights Group, said: "The Home Office's job is to uphold the law: not to reinterpret it for commercial interests. It's extraordinary, when you think of the blatant disregard Phorm showed towards UK laws in its secret trials, that this sort of lax attitude should be shown."
Home Office 'colluded with Phorm'
Pirate Bay lawyers demand retrial
Lawyers of four men convicted of running The Pirate Bay file-sharing website are seeking a retrial, saying the judge had a conflict of interest.
Judge Tomas Norstrom is a member of the Swedish Copyright Association and sits on the board of Swedish Association for the Protection of Industrial Property.
But the judge has told Swedish Radio: "These activities do not constitute a conflict of interest."
Sweden's Court of Appeal would rule on a possible retrial, the lawyers said.
Frederik Neij, Gottfrid Svartholm Warg, Carl Lundstrom and Peter Sunde were found guilty of breaking copyright law on 17 April 2009 and sentenced to a year in jail.
The four were also ordered to pay $4.5m (£3m) in damages to a number of entertainment companies, including Warner Bros, Sony Music Entertainment.
Peter Althin, who represents The Pirate Bay (TPB) spokesman Peter Sunde, said it was for the appeal courts to decide if there was to be a retrial, as it emerged the judge and lawyers for the entertainment industry were members of the copyright association.
"In the autumn I received information that a lay judge could have similar connections. I sent these to the court and the judge was excluded in order to prevent a conflict of interest. It would have been reasonable to then review this situation as well," Althin told Sveriges Radio.
Speaking to the BBC, Sven-Erik Alhem - a former senior attorney in Sweden - said the judge had made an error of judgement, but a retrial was unlikely.
"The judge should have told the parties of his other engagements. Had he done that then they could make a decision on whether they wanted him as a judge in their case.
"I'm not sure the superior court could say that this was unfair, but had he been open then it wouldn't have been an issue," he said.
Rick Falkvinge, leader of the Swedish Pirate Party, told the BBC the judge had made an "unforgiveable" decision.
"This is corruption and judicial decay at an unforgiveable level.
"The judge in one of Sweden's most high profile cases ever is also a member of an interest organisation for one side and associates with the prosecution trial lawyers in his free time? That is inexcusable corruption," said Mr Falkvinge.
The Pirate Bay file-sharing website was set up in 2003 by anti-copyright organisation Piratbyran, but for the past five years it has been run by individuals.
Millions of files are exchanged using the service every day.
No copyright content is hosted on The Pirate Bay's web servers. The site hosts BitTorrent links to TV, film and music files held on its users' computers.
Facebook users say yes to changes
Facebook users have voted to back changes which give them control over data and content they post on the site.
Early results suggest 75% of those who voted support the proposals.
The vote was triggered by changes Facebook made to its terms and conditions in February.
The move drew fire because it appeared to hand the social network site ownership of images, videos and data that users posted on profile pages.
Low turnout
In response to the criticism, Facebook withdrew the changed terms, wrote a new set and invited its 200 million members to make their views known.
The new terms return control of what is done with data put on the site to users and give them the right to ask for it to be deleted if they stop using Facebook.
In total about 600,000 people took part in the week-long vote. Initially, Facebook said it would only adopt those new terms if 30% of its members voted in support of them.
However, writing in a blog posting on Facebook announcing the early results, Ted Ullyot, Facebook's legal chief, said it would adopt them anyway.
"You can expect to see the new documents on the site in the coming weeks," wrote Mr Ullyot.
He said a preliminary count suggested 74.4% backed the new Facebook Principles and Statement of Rights and Responsibilities.
The results are now being assessed by an external auditor to produce a final count.
Mr Ullyot expressed disappointment that there was not a bigger turnout but acknowledged that the exercise was a first for both Facebook and its members.
Future votes on changes to how the site operates, which are enshrined in the new terms, will have a threshold of less than 30% for any alterations to be made binding.
"We are hopeful that there will be greater participation in future votes," he wrote.
Microsoft suffers first sales dip
Microsoft has said sales in the first three months of 2009 fell 6% from the previous year - its first quarterly drop in 23 years as a public company.
The world's largest software maker said profit dropped by 32% to $2.98bn (£2bn). Sales slipped to $13.65bn.
Microsoft makes most of its profit selling the Windows operating system and business software such as Office.
However demand has been hit by falling sales of personal computers as consumers and businesses trim spending.
Microsoft chief executive Steve Ballmer told the BBC World Service that its results had been "impacted" by the downturn in the world economy.
He also admitted the company would have had less total sales "than we would have had before the downturn".
"We expect the weakness to continue through at least the next quarter," said the firm's chief financial officer, Chris Liddell.
Microsoft - which became a public company in 1986 - has been looking at ways of cutting costs.
In January, it said it would cut up to 5,000 jobs over the next 18 months, including 1,400 immediately.
'Controlling costs'
Microsoft's fall in profit was more severe than analysts had been expecting.
"There's stuff to be happy with - they're controlling costs and getting that under control," said Kim Caughey, a senior analyst with Fort Pitt Capital.
The bad thing is demand and consumer preference seems to have affected their top line
Kim Caughey, Fort Pitt Capital
Shares in Microsoft rose by 4% in after-hours trading - possibly reassured by comments from the firm that it was on track to release the next version of its operating system, Windows 7, during its 2010 financial year.