Metadata bill crosses privacy line: Greens

The cost to internet and mobile phone users of keeping metadata for police and spy investigations has been labelled a "surveillance tax".

The federal government on Thursday introduced draft laws to parliament requiring telecommunications companies to keep metadata for two years.

While the government will make a "substantial contribution" to cover company costs, telco customers might have to make up the difference.

"It's a surveillance tax," Greens senator Scott Ludlam told reporters in Canberra.

"It's imposing a cost on people that they don't want to pay."

As well it was about introducing a regime of "mild, real-time, passive surveillance".

Senator Ludlam believes the legislation goes too far, even though he acknowledges intelligence agencies are seeking greater surveillance powers for anti-terrorism and law enforcement operations.

"At some point you have to draw a line. We are drawing the line at mandatory data retention."

Senator Ludlam warned the measure would result in a mountain of useless material as other authorities around the world had found.

"You're looking for the same number of needles in a much larger haystack."