Prime minister David Cameron is urging major companies to allow GCHQ to monitor the data passing over their critical networks, according to reports.
The move is being described by the government as in the interests of national security, with the likes of BT, British Airways and National Grid being asked to allow their data networks to be constantly analysed by GCHQ, the UK government's "listening centre", the Daily Telegraph reported.
Under the plans, GCHQ could analyse network traffic judged as unusual, as well as plan any necessary action. Large businesses attended a Downing Street meeting to discuss the plans last month, the paper reported.
BT has already bought into the the plan, with a spokesman telling the newspaper: "We already manage security solutions across the UK's critical national infrastructure and we will be collaborating with the government to share our expertise in protecting the UK against all cyber-threats."
The government fears that hostile states or terrorist groups could use the internet to target communication networks, financial services, the electricity grid or air traffic control systems.
Security minister Baroness Pauline Neville-Jones said "a significantly expanded" national cyber security hub at GCHQ will analyse streams of data from major communications, power and transport providers for evidence of hacking.
Baroness Neville-Jones denied suggestions that the plans would have privacy implications for customers of the major firms involved.
Meanwhile, the powers, remit and budget of the newly formed government Office of Cyber Security and Information Assurance (OCSIA) are unclear, the House of Commons Science and Technology Committee warned in a report published earlier this month.
The OCSIA is nominally responsible for providing a strategic direction on cyber security and information assurance for the UK. It is also supposed to have a strong working relationship with private sector partners, to exchange information and promote best practice in improving cyber security and tackling e-crime.