Feb. 27 (Bloomberg) -- A German law authorizing online searches of personal computers is unconstitutional, the country's top constitutional court ruled, narrowing Interior Minister Wolfgang Schaeuble options in combating terrorism.

The law authorized the state of North Rhine-Westphalia's intelligence agency to access personal computers, networks and Internet communications. Online searches could comprise access to hard drives, monitoring what a user is typing on a keyboard and listening in to telephone conversations via the Internet.

The case has been closely watched in Germany amid divisions within Chancellor Angela Merkel's coalition government over whether to authorize the federal police to use online searches in the fight against terrorism. A journalist, three lawyers and a member of the opposition Left Party challenged the law, which has been championed by Schaeuble, arguing it violates constitutional protections of privacy rights.

The Karlsruhe-based Federal Constitutional Court said that the law ``violates the right to liberty which also guarantees the constitutional protection of the integrity and confidentiality of information technology systems,'' according to an e-mailed statement.

Online searches and Internet monitoring are only permissible if there is concrete evidence that a compelling interest is in danger, such as life and limb, liberty or common goods essential for human existence, the judges said. A court must authorize the use of such measures in each individual case, they added.

IT `Confidentiality'

``For the first time we recognize today that the constitution protects the confidentiality and integrity of information technology systems,'' Hans-Juergen Papier, the court's president, said in a separate statement.

``Online searches are a central tool to fight the dangers of international terrorism,'' Schaeuble, a member of Merkel's Christian Democratic Union, said. The ruling will be ``analyzed carefully'' and considered to authorize searches in federal police law ``as soon as possible,'' he added.

Justice Minister Brigitte Zypries, a Social Democrat, said the ruling will foster trust in the integrity of information technology systems. She will examine whether to included ``narrowly tailored'' online searches in German criminal procedure to investigate grave crimes like terrorism, she said.

The court upheld the passage of the law that authorizes the intelligence agency to request information about money transfers and clients from banks and financial service providers, saying the measure was adequately restricted to narrowly defined cases.

The cases are BVerfG 1 BvR 370/07 and 1 BvR 595/07.

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net.

Last Updated: February 27, 2008 09:15 EST