In an unexpected move that will be seen as a blow to home secretary Theresa May, government sources said they had “dropped completely” key elements of their original 2012 proposals, dubbed the “snooper’s charter” and blocked during the coalition by Nick Clegg.

In a statement, senior sources said that rather than increasing intrusive surveillance, the bill would bar police and security services from accessing people’s browsing histories – a power demanded by the security services – and that “any access to internet connection records will be strictly limited and targeted”.

They also revealed that ministers had ruled out plans to restrict or ban companies from encrypting material on the internet that had alarmed privacy and technology campaigners.