Under plans for a voluntary code, law enforcement agencies would have more access to details of when emails were sent and who sent them to whom - but not their content.
That access was seen by Home Secretary David Blunkett as an important part of intelligence-gathering in the wake of the 11 September attacks.
The Internet Service Providers Association says it is worried the code would break European law, but the government says the code is the best way ahead.
Clash of laws?
The Guardian newspaper reports that Nicholas Lansman, ISPA's secretary-general, has written to Home Secretary David Blunkett saying providers are unconvinced the changes are necessary for tackling terrorism.
Mr Lansman said the association could not recommend providers use the voluntary code.
ISPA spokesman Tim Snape told BBC Radio 4's World At One the impact of the code was potentially very wide.
"What concerns us is how this law will actually be applied in an international industry with very small and very large operators," said Mr Snape.
Internet providers were "totally supportive" of law enforcement, said Mr Snape.
But there were concerns the plans would infringe European Union law.
"We cannot break the law and if a UK law requires us to do one thing that cases us to break the law in Europe, then we have a serious problem," he added.
Helping counter-terrorism
Home Office Minister Beverley Hughes said extensive talks were continuing.
The government still thought the voluntary code was the best way forward, said Ms Hughes, appealing for the industry to help make the plans work.
The plans were "very, very important" for fighting terrorism, Ms Hughes told the World At One.
It was not for internet providers to start reopening debates already settled by Parliament, she argued.
The list of agencies which would have access to the internet data would be determined by an order of Parliament, stressed Ms Hughes.
News of the internet providers' concerns has prompted civil rights campaigners to renew their opposition to the measures.
And Ian Brown, director of the Foundation for Information Policy Research, said: "Civil society, Europe's data protection commissioners, and now internet service providers have all told the Home Office their data retention plans are an unacceptable invasion of privacy."