A federal parliamentary committee has issued a critical report on Government plans to store data on Australians' phone and internet use for up to two years.

The powerful Joint Committee on Intelligence and Security was asked to consider an extensive package of proposed changes to Australia's national security laws and agencies.

It mostly focused its attention on just one change: for telecommunications data to be stored for up to two years in case it is required by law enforcement or security agencies.

The Government said it did not necessarily endorse the proposal, but wanted public feedback.

Today, after more than a year of consideration and hundreds of submissions, the inquiry's chairman, Labor MP Anthony Byrne, tabled the bipartisan report with 43 recommendations.

It notes that while a data retention scheme would be of "significant utility" to national security agencies, it also raises fundamental privacy issues.

"I note that the committee was faced with several difficulties. These included that the terms of reference were wide-ranging and canvassed some of the most complex and significant reforms to national security legislation ever to come before the parliament," Mr Byrne said.

Mr Byrne says after careful consideration, the committee formed the view that a data retention policy must be a decision of government, and was not for the committee to recommend.

"The actual option of a committee being asked to recommend the establishment of an intrusive power without draft legislation provided almost and existential moment for the committee," he said.

"If you see from the events of America with PRISM, what has occurred is that the public must have confidence in its oversight by parliamentary oversight agencies."

PRISM is a US government program that gives the National Security Agency (NSA) access to vast amounts of internet data such as emails, chat rooms and video.

The program was revealed by whistleblower Edward Snowden, who is now seeking asylum in Ecuador.

Government's handling of issue criticised

The committee did make recommendations about how a scheme should work if it was pursued by a government.

But Mr Byrne says there was an absence of detail about the suggestions, and it was "disconcerting" for the committee to discover that the Attorney-General's Department had significantly more information on the proposal than it initially wanted to put forward.

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The deputy chairman, Liberal MP and former attorney-general Phillip Ruddock, was also blunt about the management of the proposals.

"The handling of this issue by the Government has been appalling," he said.

"It should have brought forward, as the chair mentioned, precise recommendations in the form of legislation, draft legislation, that we could comment on in a meaningful way."

Concerns over privacy in wake of PRISM

Labor Senator and committee member John Faulkner says the recent controversy about PRISM will heighten community concerns.

"We must ensure none of our citizens is surprised if and when our intelligence, security and law enforcement agencies use their legislated powers," he said.

"We must ensure any legislation to establish a mandatory data retention scheme in Australia contains the strongest safeguards to protect the privacy of our citizens."

Greens Senator Scott Ludlam says the Government should now abandon any plans for data retention.

"This proposal will be back, I have absolutely no doubt about that whatsoever," he said.

"It will be exhumed in a different form, with a few of the committee's recommendations attached, and it will be back.

"And it is a proposal that I suspect will have to be fought and contested, potentially, again and again."

In a statement, Attorney-General Mark Dreyfus says the Government will carefully consider the report's recommendations before it decides the next step.

But he says given the committee's view, a data retention scheme will not be pursued at this time.