A European Union official claimed this week that Brussels has no intention of regulating digital encryption.

But speaking at the RSA Data Security Conference in San Francisco, Mr Detief Eckhert, adviser to the Commission's Director General on Telecommunications, the Information Market and Exploitation of Research, added that new laws on privacy would apply to the Internet.

Encryption, a data-scrambling technique which locks computer files, has become a hot issue for American business, government and consumers. Law enforcement agencies in the US argue that they should be allowed to hold a software "key" which would enable them to decode all encrypted files.

Additionally, the US government has barred the export of any data-secure software - software which uses so-called "strong encryption".

Agencies like the US Federal Bureau of Investigation have insisted that law enforcement needs the ability to open files if needed for security reasons. In general, businesses and consumers have squared off against the government, arguing that encryption regulations threaten privacy and stifle sales of American software, giving international competitors an unfair advantage in the secure-software market.

Mr Eckhert, speaking as part of a panel on Crypto Policy Around the Globe, said the EU wanted instead to allow market forces to determine developments in the use of encryption technologies, and that Brussels supported industry self-regulation. In addition, the EU recognised the job-creation potential of the encryption industry, he said.

One country should not have the role of determining international cryptography regulation, Mr Eckhert added. "We are dealing with a global issue. It is nothing that one country or one region should decide. Communications is global, and we need worldwide agreements," he said.

A German official noted that his government would not comply with American laws requiring that encryption software users hand over keys to US agencies.

"Should foreign law enforcement and other foreign agencies have access to German users? The answer is no," said Mr Ulrich Sandl, an official from Germany's Ministry of Economic Affairs.

While the German government would not ban the use of American software products which contain "key recovery" - the built-in ability for regulators to gain access to encrypted files - such programs "may not be in accordance with German law", he said.