Australian spy agencies will be granted new digital surveillance powers under a bill being prepared by the Abbott government, expected to be introduced into parliament in July.



The government will also seek to establish a mandatory data collection regime, where phone and internet providers are forced to harvest and store their customers’ metadata, in a separate bill in the near future, News Corp Australia has reported.



The reforms will reportedly be in line with recommendations made by the federal government’s joint committee on intelligence and security in May 2013, aimed at updating Australian surveillance laws in line with the “contemporary communications environment”.



Plans to boost digital surveillance powers were drafted before the latest outbreak of sectarian violence in Iraq. But the prime minister, Tony Abbott, said the new measures would help counter the threat posed by up to 300 Australians who have flocked to the region to fight with the Sunni extremist group, the Islamic State in Iraq and Levant (Isis)



“We’ve stopped the illegal boats; we will ensure we stop the jihadists as well,” Abbott said on Monday. “The last thing we want is people who have been radicalised and militarised by experience with these al-Qaida offshoots in the Middle East … returning to create mischief in Australia.



“It’s important to ensure that our police and security services have the means at their disposal to ensure our community is safe.”



Among the recommendations made by the committee in its May 2013 report was that the Australian Security and Intelligence Organisation (Asio) be given new powers to “disrupt” target computers that pose a risk to national security; to monitor the entire network on which a target computer is hosted; to use a “third party” computer as a gateway to access to a suspicious computer or network.



The committee found that a mandatory data retention scheme, which would see telecommunication providers secure their customers’ data for use by law enforcement for up to two years, would be of “significant utility” to spy agencies.



But it said any such regime would raise “fundamental privacy issues” and “civil liberties concerns” that needed to be addressed, it said.



“There is a diversity of views within the committee as to whether there should be a mandatory data retention regime. This is ultimately a decision for government,” the committee said.



The attorney-general at the time, Mark Dreyfus, shelved the proposed scheme before the 2013 federal election, saying he would await further advice and “comprehensive consultation”.



But the deputy opposition leader, Tanya Plibersek, signalled her support for mandatory data retention in March, reasoning that metadata gave access only to the “envelope”, not the contents.



“People describe it as keeping the haystack so you can go back and look for the needle afterwards,” she said.



Plibersek also backed reforms to digital surveillance laws more broadly. “There continue to be threats. Those threats may increase,” she said at the time. “I want to give [intelligence] agencies the maximum ability to do their job well, within the bounds that people would expect.”



At least one internet service provider opposes mandatory data retention; iiNet’s chief regulatory officer, Steve Dalby, told an inquiry in 2012 the company had “sincere misgivings about the principle of non-stop intelligence gathering on innocent members of the community who are never ‘persons of interest’ in the law-enforcement sense”.



Dalby also questioned the cost of retaining such a high volume of data, suggesting it would add $3m a month to iiNet’s expenses, which would likely be passed on to customers.



The Law Council has also expressed “grave concerns”. Phillip Boulten SC, from the council’s criminal law committee, told a Senate inquiry in April that “holding that sort of data for, say, two years will seriously jeopardise privacy concerns, and lead to extraordinary costs for internet service providers”.



The Greens senator Scott Ludlam, who successfully moved a Senate inquiry into telecommunications interception late last year, said he was “reluctant to comment” until the government presented parliament with draft legislation.



“I think everyone needs to be a bit careful because the debate is proceeding by way of leaks to the Daily Telegraph, rather than by way of sensible proposals or formal proposals,” Ludlam said. “I don't think that's the appropriate way to deal with issues of such importance.”



The attorney general, George Brandis, has been contacted for comment.

