LONDON (Reuters) - The ``cookie'', a simplistic identification tag that most Internet users unknowingly carry when surfing the Web, runs the risk of being outlawed under a proposed privacy directive from the European Commission (news - web sites).

The legislation has triggered concern in Europe's Internet advertising community. The Interactive Advertising Bureau UK (IAB) said British companies could lose 187 million pounds ($272.1 million) if the directive is ratified.

``Cookies have been branded as spyware tools, or some kind of subversive software,'' Danny Meadows-Klue, chairman of the IAB United Kingdom, told Reuters. ``But it's what we use everyday.''

The IAB has marshaled support from its members across Europe to launch a lobbying effort it calls ``Save our Cookies.''

Meadows-Klue admitted the name sounds a bit childish, but said the ramifications of the EU's directive were serious. It could result in the loss of more jobs and more businesses failing in the already-beleaguered Internet sector, he said.

Meadows-Klue said the abolition of the cookie -- an early Internet technology designed for the first Web browsers -- could have an adverse impact on e-commerce and online advertising sales, the primary revenue sources for all Internet businesses.

The legislation winding through the EU Parliament claims the cookie is a threat to consumers' personal privacy as it collects data on their comings and goings without asking for their consent.

THE COOKIE: THE WEB'S SIMPLE MEMORY CHIP

Computer experts say cookies are an essential piece of Internet browsing architecture. The technology allows for the storage of basic identifying information in a Web user's browser gleaned from the sites a user visits.

The cookie gives Web sites a memory, allowing, for instance, Amazon.com to greet a repeat visitor by name and provide book recommendations based on past purchases.

Web site operators typically monitor bulk cookie data to determine which areas of its site are most popular with visitors. News sites, for instance, could use the data to determine where to position a story on a Web page based on where visitors have clicked in the past.

The data is also reviewed in this way to decide where to purchase banner ads to draw likely visitors to your site.

COOKIE: FRIEND OR FOE? But the sticky point about cookies is that they often store data without a users' explicit approval. The Commission has been debating whether individuals should have the last word (lawmakers call this the ``opt in'' method) on what bits of personal information are collected on them while online.

The cookie proposal, which was an amendment to a Parliamentary report on electronic data collection and privacy, is scheduled to go for a vote on November 13 before the European Parliament plenary assembly. If approved, it goes to the EU Council of Ministers for a final vote.

The amendment, proposed by Dutch Parliament member W.G. van Velzen, likens cookies to ``hidden identifiers'' that track and store information on an Internet users' surfing habits.

The existence of such a technology, the amendment states, ''may seriously intrude on the privacy of these users. The use of such devices should therefore be prohibited unless the explicit, well-informed and freely given consent of the users concerned has been obtained.''

Meadows-Klue envisages a world without cookies, where each time a site is entered, a user would have to register first or re-enter certain data for each repeat visit.