'This strategy has profound implications in terms of user privacy since it makes government surveillance of an individual's traffic a reality, and incorporates technologies that impact heavily on Chinese Internet users' right to free expression,' said Greg Walton, a researcher with Kundrel who wrote a detailed report on the Golden Shield last year.

'It [will be] much more difficult for human rights and democracy activists to communicate with 'illegal' information sources and remain undetected by their government.'

Mr Walton said the change was a reaction to the inability of security forces to effectively filter content coming into China through the country's five Internet gateways - the system known derisively as the Great Firewall.

Instead, he said officials were looking for ways of surveillance of individual users at the edge of the network - their computers - using technology originally developed to manage and personalise broadband content delivery.

A research note prepared by Gartner analysts Dion Wiggins and Louisa Liu described the Golden Shield as a monolithic digital surveillance network that links national, regional and local security agencies using the Internet and networked video cameras.

'These will link to a network of real-time databases spread across the country that will store a digital record of every citizen. The project goes well beyond blocking and monitoring [Internet] content to incorporate speech and face recognition, closed-circuit television, smart cards, credit records and other surveillance technologies,' the note said.

The plan was first made public at a Beijing information technology fair in late 2000, where numerous Western companies pitched proposals to provide the telecommunications and networking technology needed to make the system work. At the time, government officials said US$70 million had been invested in research, but the overall cost of the project would be many times that much.

There has been little official comment since then.

The sheer magnitude of what is being discussed raises questions about Beijing's ability to field the necessary technology and mobilise the bureaucracy to support it.

Western experts have observed inconsistent application of the existing laws, noting that new regulations are often met with an initial flurry of activity and then ignored.

But activists working in China say the Golden Shield is moving forward.

'I have no doubt about it. In every sector I look into regarding security in the PRC I see that they are moving ahead. It's very much in full swing,' said Nicolas Becquelin, senior researcher at the Hong Kong office of Human Rights in China (HRIC).

The recent installation of filtering software and so-called black boxes that track the online activities of Internet cafe patrons is seen as a sign of things to come.

Mr Becquelin said Golden Shield had gone virtually unnoticed in the West because few China watchers had the technical knowledge to understand the implications of what was happening and characteristically, Beijing had been silent on a matter of internal security.

Mr Walton said there was recent evidence that state censors had removed the blocks on some banned Web sites to see who tried to access them. 'The reverse-trace route monitoring we do on a regular basis shows a surprising number of interesting sites that were once blocked are now going through, but with anomalous traffic signatures, suggesting some systematic surveillance of sensitive sites. Perhaps the PSB [Public Security Bureau] is trying to learn more about surfing habits,' he said.

Bobson Wong, executive director of the New York-based Digital Freedom Network, said Chinese efforts to control the Internet had been erratic, at times appearing even lacklustre, but that the recent trend had been towards a significant crackdown.

He said the Chinese leadership appeared to be at a crossroads, with conservatives who backed more rules and increased enforcement at odds with those who feared stifling the economic benefits the Internet could deliver. The conservatives appear to be winning.

'The real wild card in China's future is the danger of domestic unrest - like peasant revolts and miners' strikes. If people in China use the Internet to discuss labour unrest and censors are unable to stop those discussions, the government is in for some real trouble,' Mr Wong said.

Meanwhile, even as the Chinese Government looks for new ways to shore up the Great Firewall with the Golden Shield, campaigns have begun to defeat both schemes.

Self-styled human rights hackers who have battled against efforts by China and almost two dozen other countries to censor the Web are working on applications that will allow access to banned sites and let users avoid detection.

The US Central Intelligence Agency has also entered the fray. The CIA invested in SafeWeb, an American company that developed Triangle Boy software to avoid blocking. The application is used by the Voice of America (VOA) to penetrate China.

Sandra Song, communications director for SafeWeb, said VOA e-mailed a weekly newsletter to more than 800,000 Internet users in China with information on how to access its Web site. She said the software had been successful and SafeWeb was negotiating with VOA to expand the project.

In China, the crackdown on Internet users continues. The US-based Committee to Protect Journalists (CPJ) issued a statement yesterday condemning the 11-year sentence handed down recently to activist Li Dawei for downloading and printing 500 articles from the Internet. It is the longest sentence the CPJ has documented for Internet-related activities in China.

According to the CPJ, 13 people are in jail on the mainland for publishing or distributing information online. HRIC puts the number at 20.