The Dutch government has published draft proposals that would give its security services sweeping new powers to intercept internet traffic – powers that critics say would be “among the most far-reaching in the world”.

With a population of 17 million, the Netherlands is already the most heavily phone-tapped country in the world – with about 26,000 taps granted to the police and other agencies, excluding the security services, every year, according to figures from the Department of Justice.

However, drug traffickers and terror groups such as Islamic State have moved online to less-accessible areas of the internet known as the “dark net” or “dark web”, making intelligence-gathering increasingly difficult without bulk interception and analysis using search algorithms.

For smaller countries such as the Netherlands, broader online powers, advocates argue, are an essential, cost-effective means of increasing the reach of security services – already under pressure to improve counterterrorism after the Brussels bombs in March and the Thalys train attack last year.

The current Dutch legislation on phone tapping is contained in the Intelligence and Security Services Act 2002, which will be updated by the new proposals.

Most importantly, the draft proposals as they stand will do away with the difference between fixed link and cable communications – giving the main intelligence service, AIVD, and its military equivalent, MIVD, access to all fixed link and internet traffic.

It’s understood the new rules will oblige telecommunications companies to record and store all communications routed through them – before handing that data on to the authorities for analysis.

Although the long-awaited draft was published last Friday, the government’s intentions were clear and have already been criticised as “too far-reaching” by two of the main telecoms providers, KPN and Tele2, as well as by the employers’ organisation, VNO-NCW.

KPN says the proposals are in direct conflict with the right to communicate in privacy laid down in the constitution, while Swedish-owned Tele2 says that, in any case, the proposals will be “impossible” to implement.

Most worryingly in economic terms, the employers warn that global companies could leave the Netherlands because they will “lose their right to communicate online in confidence”.

The UK-based privacy watchdog, Privacy International, has warned that if the new rules go ahead as planned they will be “among the most far-reaching in the world” and will “set a poor example for countries without strong democratic traditions”.

“We would strongly urge the Dutch government “, Privacy International said, “not to expand surveillance beyond what is necessary and reasonable in a democratic society.”

The Dutch Human Rights Commission agrees, describing the proposals as “a major infringement of the right to privacy and secret communications”.

However, the Dutch government says the new laws will be matched by new safeguards.

It plans to set up a new commission made up of judges who will assess in advance all applications to tap cable traffic. There will also be a limit on the time data can be stored and new powers for the security services watchdog.