Home secretary Theresa May said that allowing police and intelligence services to access the information was essential in combating criminals using new technology.
However, Tory MP David Davis branded the move as "incredibly intrusive" and a strategy that would only hit the "innocent and incompetent".
Currently in draft form, the Communications Bill has been branded a "snooper's charter" by privacy campaign groups for its new measures for storing user data.
Under present laws, communications service providers are required to store records of phone and text chatter, along with email on their own servers for 12 months.
But the new plans would extend that to a broader range of data, including webmail, voice calls over the internet, online gaming and use of social networks such as Facebook. Web visits would be recorded under the plans, but this would not extend to logs of individual page views.
Wary of expected opposition, the government has made the concession that local authorities would be stripped of their current powers to access phone call data.
But the bill is still likely to face wide ranging opposition in Parliament, with many Lib Dem and Conservative MPs ready to back Davis's call for the legislation to be watered down or scrapped entirely.
Speaking today on BBC Breakfast, May insisted that the measures were not about snooping on people, but rather about stopping illegal activity.
"It's not about the content, it's not about reading people's emails or listening to their telephone calls," she said.
"This is purely about the who, when and where made these communications and it's about ensuring we catch criminals and stop terrorists."
But Rachel Robinson, the policy officer at rights group Liberty, expressed concern about the plans.
"It's good that local councils won't be able to watch the entire population but even law enforcement should be targeting suspects - not all citizens," she told the BBC.
"Just like the internet, any private home can be a crime scene, but should we install hidden cameras and microphones in every bedroom in the land?"
The police and security services have long called for more powers to help them track and detect criminals and terrorists who use social media and online gaming services to communicate with each other.
Writing in the Times today, Metropolitan Police commissioner Bernard Hogan-Howe said that the new powers were essential in waging "total war on crime".
He warned MPs that police risked losing ground on criminals unless the legislation was passed.
"Put simply, the police need access to this information to keep up with the criminals who bring so much harm to victims and our society," said Hogan-Howe.
Under the proposed measures, officers would still need to obtain a warrant to gain access to the communications. But government would be able to request any service provider, including Virgin Media, BT and Sky, to retain data about internet usage.
The last Labour government was forced to scrap plans to create a single, UK-wide database of internet data following protests, and May said that there no plans to resurrect this proposal.
But Tory backbencher David Davis, a former shadow home secretary and prominent civil liberties advocate, has slammed the proposals.
"If they really want to do things like this - and we all accept they use data to catch criminals - get a warrant. Get a judge to sign a warrant, not the guy at the next desk, not somebody else in the same organisation," he told BBC Radio 4's Today programme.
"The only people who will avoid this are the actual criminals, because there are ways around this - you use an internet cafe, you hack into somebody's WiFi, you use what's called proxy servers, and they are just the easy ways."
Jim Killock, the executive director of the Open Rights Group, claimed that the government was trying to "bury bad news" in the snooping bill by announcing it on the day of David Cameron's appearance at the Leveson inquiry.
"Today Cameron is appearing at the Leveson Inquiry, and at the same time the government is releasing its plans to snoop on the internet," he said. "This is a very bad sign that they want to 'bury bad news'."
The ORG intends to hold an emergency briefing with Privacy International and Big Brother Watch in Committee Room 18 at Parliament at 2pm today (June 14) to discuss the proposals with journalists and MPs.