Internet service providers (ISPs) in Australia have rejected calls for government-funded support to compensate carriers who collect and store data used to help law enforcement track terrorism and serious crime.

The debate follows the introduction of European Commission legislation requiring telecoms operators to store data for a minimum 12 months and ISPs a minimum six months as part of the government"s efforts to stamp out terrorism.

The proposed laws state that compensation should be provided for any costs borne by companies that assist the government.

It follows the London bombings in July where police were able to track terror suspects by examining mobile phone records.

However, local telecommunications analyst Paul Budde said ISPs should bear the brunt "for the common good" of any costs associated with collecting and storing data.

"If the use of specific technology allows an ISP to be a "good citizen" then they should share the burden," Budde said.

Unwired Australia operations director Phil Ridley said that under the telecommunications act carriers are required to retain certain information, but only if a request is formally made by a government agency.

Ridley admitted the issue of what information carriers need to retain before being served with an intercept warrant is a hot topic, because there is some confusion about what to retain.

Under privacy laws, Ridley said, it is illegal to simply hand over information without a warrant.

"If a law enforcement body asks an ISP to gain information for them, say if they needed interception conducted on a person of interest, there is a mechanism to recoup reasonable costs, ," Ridley said.

"We have had to recoup costs from a government agency and they were quite reasonable and pragmatic about it."

David Foreman, Consumer Carriers" Coalition executive director, said that while there is no direct compensation for carriers, there are some rebates. "If you are building a network and installing equipment for intercepts you can gain a rebate on some costs," he said.

An Optus spokesperson said the Telecommunications Act was updated in 1997 and states that carriers and ISPs provide "reasonable and necessary assistance" when required.

Despite the increased terrorism threat, particularly in the wake of further Bali bombings, a spokesperson for IT Minister Helen Coonan said there were no plans to introduce any new data retention laws for carriers.