Google's ambitions to expand its Street View mapping service in the Czech Republic have been dealt a fresh blow today as the country's privacy watchdog says the product "disproportionately invades citizens' privacy".

Last week the Czech Office for Personal Data Protection refused for the second time to allow Google to collect images for its panoramic Street View service, citing fears it could break the law. Today Igor Nemec, chairman of the Czech privacy watchdog, said the technology behind Street View presented a threat to the privacy of the country's 10.5 million citizens.

Data protection officials in Prague have been investigating Google Street View since April, six months after the service launched in the country. Photographs already collected by the internet company have been allowed to remain on the site, though talks over the future of Street View – which has also run into trouble in Germany – are ongoing.

Google today said most conditions set out by the government had been met. The company now only publishes blurred images of individuals photographed in the Czech Republic and has said it will remove any images subject to a complaint by a member of the public. Google said it would collect no new data in the country until the negotiations had been resolved.

Nemec's statement that Street View "disproportionately invades citizens' privacy" will set back the California-based company's hopes of satisfying the Czech government and continuing to roll out the service across the country.

He also expressed concern about the technology used to capture the panoramic images, saying the cameras built atop Street View cars are too tall (2.7 metres), allowing photographs to be captured "over the fence".

Earlier in the week Nemec said Google had failed to comply with obligations incumbent on companies collecting data in the country. "A data [collector] seated outside the European Union is obliged to appoint a representative on the territory of the Czech Republic. Google Inc, an American entity, has failed to do this."

Google met officials in Germany earlier this week where calls for stricter data protection regulation have intensified around the company's Street View product. Google has given the German public until 15 October to apply to opt out of being photographed on the site.

The UK's information commissioner ruled that the Google Street View service does not encroach on the privacy of citizens. Writing in response to a complaint by campaign group Privacy International in April 2009, the information commissioner said: "If consent [to upload images of private citizens] were required by law, then the producers of, say, Match of the Day, would have to gain the consent of all people attending televised football matches who might be caught on camera."

Google continues to be investigated by many countries across the world – including the UK – for the unlawful collection of Wi-Fi data by its Street View cars, which the company admitted it mistakenly retrieved while mapping towns and cities.

• To contact the MediaGuardian news desk email editor@mediatheguardian.com or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.

• If you are writing a comment for publication, please mark clearly "for publication".