Lord West said he advised navy colleagues about internet privacy
No decision has been taken to create a huge database containing details of all phone calls, e-mails and internet use, security minister Lord West says.
The Information Commissioner has warned that such a database could be a "step too far for the British way of life".
Asked in the House of Lords about that warning, Lord West said: "It is very early days as to where we go on this."
But the switch from traditional phones meant the "entirely new" communication methods had to be assessed, he said.
There have been reports that the giant database is planned for the government's proposed Communications Data Bill.
That led Information Commissioner Richard Thomas to call in his annual report this week for a full public debate first.
Mr Thomas acknowledged that "targeted and duly authorised" interception of communications by terrorists and other suspects could be "invaluable".
But he warned that people must still "stand up" for their "fundamental liberties" and freedoms.
"Lines have to be drawn somewhere, and there should be a full democratic debate about where exactly the lines should be drawn," Mr Thomas said in his report.
"Do we really want the police, security services and other organs of the state to have access to more and more aspects of our private lives," his report added.
Speculation that the government was considering collecting the information - including numbers dialled, websites visited and location of mobile phones being used - has increased because it has talked about "modifying procedures for acquiring communications data" in the Communications Data Bill.
Currently police and intelligence agencies can ask telecommunication providers for information on phone calls made, texts sent and internet sites visited.
The provider can query the request, which might then go to the interception commissioner and another watchdog - but under the new proposals, that right would be removed
Lord West, who is a former First Sealord and Chief of the Naval Staff, also issued a general warning about the lack of privacy in using the internet.
He said internet service providers could already assess "information about the consumer's internet use for the provision of value-added services".
"People must realise - and I used to say this within the Navy - there will be more people look at your internet information than look at a postcard when you write it," he told the House of Lords.
"People tend to forget that - and [that] it is used for quite legal purposes, some of it."
Lord West was also asked about trials by BT of an online system of advertising involving more than 30,000 of its customers, known as Phorm.
In 2006 and 2007 this matched adverts to users' web habits, although BT did not inform customers they were part of such a project.
The peer said the government was "not aware" of the tests beforehand, and an investigation was now checking if these had been "appropriate".
Since then BT had made a formal approach to begin a trial "of about 10,000 broadband subscribers", Lord West said, but he was unclear if this was "covered by law".
A test case might be needed to consider whether this was a form of "interception", he added.
Meanwhile a 40% pay rise for Mr Thomas has been put on hold until the autumn.
His salary had been due to increase from £100,000 to £140,000, but this has been delayed owing to a review of his powers, responsibilities and salary scale later in the year.