But the item was suddenly taken off the agenda pending consultations among EU members, with concern focusing on the danger that governments could be sued if personal information is misused by the US authorities.

"This is a substantive tech nicality," said one diplomat. "Governments really need to make sure that the legal situation is watertight. Data protection and civil liberties issues are all interrelated."

Denmark, the current holder of the union's presidency, insisted last night that agreement was still within reach. Copenhagen has been pushing hard to complete a raft of anti-terrorist, extradition and legal cooperation commitments made by the EU shortly after the September 11 attacks and wanted to close the deal.

Last year Washington and Brussels agreed to exchange information on terrorism and serious crime via Europol, but there was no agreement on exchanging personal data on suspects. Several governments, which have strong domestic legislation on data protection, have pointed to concerns about their liability if data is misused.

Civil liberties concerns have also been raised by France, Germany and Sweden. Denmark, along with Spain and Britain, stands in the camp of maximum possible cooperation with the US.

Under the proposed agreement, Europol and its US counterparts would be able to exchange personal data and analyses, so the Americans would no longer have to ask individual EU member states for information such as telephone records or bank details.

Statewatch, the London-based civil liberties watchdog, has criticised the proposed deal, accusing the EU of not doing enough to safeguard Europeans' rights.

"EU governments appear to be prepared to forget about their obligations to provide data protection for people in Europe in order to reach an agreement with the United States," it said. "This is yet another instance where, in the post-September 11 climate, agreements with the USA are to be made which are not limited to combating terrorism but extend to crime in general and over which there will be little or no accountability."

Denmark insists the US has provided adequate guarantees and that the outstanding problems are merely technical.