By 2010, all cars in the UK will be fitted with 400 pounds worth aircraft-style black boxes which will automatically call emergency services after a violent crash.
The palm-sized electrical devices will activate an SOS distress signal only if the crash is serious enough to trigger an air bag release or flip the car.
The device will dial 112 - the pan-European emergency number - and send a digital text message with details of where and when the accident happened.
A voice link to the driver will allow paramedics to find out details about injuries, while a "panic button" linking the driver to a central control room will also be installed.
Authorities have said investigators could use the information to work out the causes behind crashes and to ensure that emergency services reach victims sooner.
EU Commissioner Viviane Reding has claimed the eCall scheme could save about 2,500 lives every year across Europe.
But motoring groups fear the technology could be developed to spy on drivers' movements.
Edmund King, of RAC Foundation, said: "If this black box is used purely as an SOS safety alert system, I don't think motorists would have any objections. If however, it is developed later into a spy in the car, there would be problems".
"We do not want to see motorists checked electronically every second of the day to see if they are parked on a double yellow line or driving somewhere at four in the morning," he said.
There is also fear that the technology could be developed to track vehicles or pave the way for "pay-as-you-drive" congestion charging.
According to the Daily Mail, the British government is already considering proposals to make drivers pay up to 1.50 dollars a mile.
As of now, British mobile phone maker Telit Communications has signed up to the eCall scheme with Germany's Siemens and Wavecom of France.
The technology, though, is not new, and is already available in some cars. Vauxhall's parent company General Motors has a system called OnStar, which includes an automatic SOS option.