Theresa May is to put the Labour peer who chaired the intelligence watchdog during the Iraq war in charge of scrutinising her controversial surveillance legislation, the Guardian has learned. Ann Taylor, who was a security minister in the last Labour government and sits on the board of defence company Thales, was approached by the home secretary last week and has accepted the job of chairing a joint committee on the investigatory powers bill.

The draft bill, likely to be published shortly, will strengthen the surveillance powers of the authorities and is expected to go beyond the communications data bill – nicknamed the snooper’s charter – which was blocked in the last parliament by the Lib Dems.

Facebook Twitter Pinterest Ann Taylor. Photograph: PA

As well as enabling the tracking of web and social media use, it will also move to strengthen the security services’ warranted powers for the bulk interception of the content of communications.

Taylor’s appointment may prove controversial given her history as a defence minister under Gordon Brown, as the chair of the intelligence and security committee between 2001 and 2005, and her board role at Thales, which manufactures surveillance, intelligence and cybersecurity equipment. Taylor was also chief whip under Tony Blair when the Regulation of Investigatory Powers Act (Ripa) was passed. It is the predecessor of May’s bill.

Last year, Taylor spoke in the House of Lords in favour of the new data retention and investigatory powers bill – emergency legislation to strengthen surveillance powers – saying: “Those of us who have had direct experience of the benefits of this kind of information will very much support what the government is doing.”

It is understood that Nick Clegg, the Lib Dem former deputy prime minister, is disappointed with the choice and believes that the government should consider other candidates for the job. He said: “Our surveillance laws are notoriously opaque. That’s why I asked David Anderson QC and the Royal United Services Institute to conduct searching reviews into how to maintain the powers needed to protect the public while also protecting our civil liberties.

“We now have a golden opportunity to get better laws on the statute book. But it is vital that the person in charge of the parliamentary committee that scrutinises the new legislation is open-minded and doesn’t come to the task with preconceptions about the outcome.”

David Davis, the Conservative MP and former shadow home secretary, said the choice of Taylor was “untenable”. “She was chief whip when Ripa went through and it was a massively flawed bill,” he said. “She was chairman of the ISC, which of itself would be a problem given its terrible reputation. It was also during the Iraq war, the ‘dodgy dossier period’ that was not exposed by the ISC, and during the period rendition was under way, which was not even investigated by the ISC.

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“This will not fill people with confidence if they are concerned with the impartiality of this committee … She is an establishment figure with strong associations with the agencies, and when she had those associations her committee was not known for being critical at a time when what they were doing was incredibly controversial, we now know. This is not meant as a personal criticism, but, positionally, she is the wrong person.”

It is understood that Taylor’s name was first put forward by Labour through the “usual channels”, the unofficial lines of communication that exist between the opposition and government whips. The job is in the gift of the home secretary, and sources have confirmed to the Guardian that Taylor has accepted the role.

The new surveillance bill was announced by David Cameron in the Queen’s speech in May, as he appeared to take advantage of his unexpected majority in the Commons to extend the powers of the security services in the wake of leaks by the NSA whistleblower Edward Snowden.

At that point, he would have been more confident about getting the legislation through, because Labour had made supportive noises about giving the intelligence agencies more powers. Since then, the election of Jeremy Corbyn as Labour leader may have thrown this into doubt, as Corbyn has a record of demanding strong protections for civil liberties – as does his deputy, Tom Watson.