Conflicts with EU free movement rules have thrown the UK's £1.2 billion electronic borders program into disarray.

The e-borders scheme is designed to collect the personal data of every passenger travelling into and out of Britain. This means, for example, that someone flying from the UK to Spain needs to submit their name, date of birth and passport details ahead of a flight and well before they got to the airport, or face the risk of being prevented from boarding.

Passenger data was checked against terrorist watch lists and used for immigration controls. However concerns have arisen that the mandatory controls violate EU rules on free movement. That means that passengers are no longer obliged to hand over travel credential information in the days running up to their flight while airlines are freed of the obligation to refuse to carry passengers that decline to pass over their details, the Daily Telegraph reports.

Instead the UK Border Agency (UKBA) will check passengers once they arrive. Refusing to provide travel credential details will no longer become sufficient reasons to refuse entry, to EU citizens at least.

The scheme, which was in the process of roll-out and was not expected to be complete until 2014, has effectively been nipped in the bud. Possible problems with the scheme emerged after the Home Office sought assurances that asking for passenger information well ahead of flights was within EU rules and became public after the EU response was considered by MPs on the Home Affairs Select Committee.

A report from the Home Affairs Select Committee warns the e-border scheme may be illegal if compulsory because it potentially violates EU laws on the free movement of people and goods between EU member states. "Commitments and assurances" made by the UK authorities mean the scheme itself is fine and it's just the compulsory element that's the problem, rather than any issues over data security and privacy.

A letter, from Jonathan Faull, director general of the European Commission's Justice, Freedom and Security department, states that Passengers must be informed in advance that handing over the information is "is neither compulsory nor... a condition of purchase and sale of the ticket", The Daily Telegraph adds.

"Passengers who are EU citizens or their family members will not be refused entry/exit or incur sanctions in any way on the basis that their passenger data is unavailable to the UK authorities for whatever reason," the letter adds.

Advanced passenger information includes data normally required for border checks, This includes the name, gender, date of birth, nationality and country of residence of travellers.

If the scheme is purely voluntary it will lose its value because criminals of whatever ilk could simply ignore it. Opposition politicians criticised the government for ploughing millions into the scheme prior to properly investigating its legality with EU officials.

Damian Green, the Conservative immigration spokesman, told The Telegraph: "It seems extraordinary that, this long into a seven-year contract that costs more than £1 billion, the Government hasn't established whether it can impose this system on travellers, and it looks from this letter as it cannot.

"This is a huge embarrassment for ministers. They have set up this elaborate, hugely expensive system and the Commission is telling them it only works if people volunteer," he added.

Phil Woolas MP, the Border and Immigration Minister, denied suggestions that the e-Borders scheme is not compliant with EU law. In a statement, Wollas defended the scheme as enabling the "arrest of murderers, rapists and the barring of would-be illegal immigrants". He doesn't touch on how the government might be obliged to make the scheme voluntary and how this might limit its effectiveness.

"e-Borders is fully compliant with EU law and this has been confirmed by the European Commission. This allows us to continue our efforts to secure our border by counting people in and out. e-Borders has already screened over 137 million passenger journeys leading to over 4,700 arrests since 2005." ®