A leading US digital rights campaign group has warned against using Google software which lets people organise and find information on their computers.
Google is increasingly in the spotlight over the issue of privacy
The Electronic Frontier Foundation said the latest version of Google Desktop posed a risk to privacy.
This is because a feature in the software lets Google keep personal data on its servers for up to 30 days.
Google says it plans to encrypt all data transferred from users' hard drives and restrict access.
The new version of its desktop search software comes as Google is battling efforts by the US Department of Justice to force it to hand over data about what people are looking for.
Some of Google's main competitors have already complied with the request for details about people's search habits.
The case has focused attention on the issue of personal information held by internet companies.
"Coming on the heels of serious consumer concern about government snooping into Google's search logs, it's shocking that Google expects its users to now trust it with the contents of their personal computers," said EFF staff attorney Kevin Bankston.
"Unless you configure Google Desktop very carefully, and few people will, Google will have copies of your tax returns, love letters, business records, financial and medical files, and whatever other text-based documents the desktop software can index.
"The government could then demand these personal files with only a subpoena rather than the search warrant it would need to seize the same things from your home or business," he said.
The EFF is concerned about a feature in Google Desktop 3 that lets users search their content on multiple computers.
To do this, people have to let Google transfer the files to its own servers.
The feature is optional and only works with certain types of files, such as Microsoft Word documents, Excel spreadsheets, PowerPoint presentations and PDF files.
The search giant has sought to reassure privacy advocates, saying it will not keep the information for more than 30 days and strictly limit who has access to the data.
"We think this will be a very useful tool, but you will have to give up some of your privacy," said Marissa Mayer, Google's vice president of search products and user experience.
"For many of us, that trade off will make a lot of sense."
The software package is widely seen as posing a challenge to Microsoft's dominance of the way people interact with computers.
It is not known how many users there are of Google Desktop but it is thought to be a fraction of the hundreds of millions that use the search engine every day.
As well as making data on a hard drive accessible on any computer, the software also lets people set up mini programs to keep track of information such as weather or news stories.
Google Desktop 3 is currently only available for Windows XP or Windows 2000.