The former Conservative Home Secretary argued the new powers risked causing enormous resentment by allowing “unfettered” access to all forms of communication.
The Coalition is to revive plans first raised then shelved by the last Labour Government to track the activities of every Briton who uses a phone or the internet.
The proposals, to be unveiled in the Queen’s Speech, will see a huge expansion in the amount of data communication providers are required to keep for at least a year.
It will allow the police and intelligence officers to monitor who someone is in contact with or websites they visit, although the content of such communications will not be accessed.
Mr Davis said: “What this does is make (existing problems) 60 million times worse. The simple truth is that this is not necessary. What’s proposed here is completely unfettered access to every single communication you make.
“It’s a very, very big widening of powers which will be very much resented by many citizens who do not like the idea. It’s going to cause enormous resentment.
Civil liberty campaigners last night said the proposals were an “unprecedented” expansion of state intrusion more akin to China or Iran.
Labour faced fierce opposition in 2006 when it proposed creating a national database to store such information and later dropped all notion of the scheme just before the last general election.
But the new Government has revived the plans and while there will be no database, providers will be required to record all activities of their customers so they can be accessed if needed.
It comes even though the Coalition Agreement promised to "end the storage of internet and email records without good reason".
Ministers will argue it is essential to help combat terrorism and serious crime such as paedophile networks.
It raises the prospects of police or security agencies being able to monitor communications in real time on people they are investigating as well as trawling back through previous contacts.
Under new legislation, internet companies will be instructed to install hardware enabling GCHQ – the Government's electronic "listening" agency – to examine "on demand" any phone call made, text message and email sent, and website accessed.
Nick Pickles, director of the Big Brother Watch campaign group, said: "This is an unprecedented step that will see Britain adopt the same kind of surveillance seen in China and Iran.
"This is an absolute attack on privacy online and it is far from clear this will actually improve public safety, while adding significant costs to internet businesses.”
Shami Chakrabarti, director of the civil rights group Liberty, said that both the Conservatives and the Liberal Democrats had resisted the plan when they were in opposition.
"There is an element of whoever you vote for the empire strikes back," she said.
"This is more ambitious than anything that has been done before. It is a pretty drastic step in a democracy.”
Some internet service providers themselves are also said to be alarmed by the move.
One senior industry source described it as “mass surveillance” that is “expensive and intrusive”.
Conservative backbencher Margot James said ministers would come under pressure to water down the proposals as the legislation passed through Parliament.
"I am sure there will be considerable pressure brought to bear as the proposals are debated for protections to be built in to protect people's privacy," she said.
Guy Herbert, general secretary of NO2ID campaign group said it was "astonishing brass neck from the Home Office, attempting to feed us reheated leftovers from the authoritarian end of the (Tony) Blair administration".
"It is not very far from a bug in every living room that can be turned on and turned off at official whim. Whatever you are doing online, whoever you are in contact with, you will never know when you are being watched," he said.
The Home Office confirmed that ministers were intending to legislate "as soon as parliamentary time allows".
"It is vital that police and security services are able to obtain communications data in certain circumstances to investigate serious crime and terrorism and to protect the public. We need to take action to maintain the continued availability of communications data as technology changes," a spokesman said.
"Communications data includes time, duration and dialling numbers of a phone call, or an email address. It does not include the content of any phone call or email and it is not the intention of Government to make changes to the existing legal basis for the interception of communications."
New powers to record every phone call and email makes surveillance '60m times worse' - Telegraph