President Obama’s effort to revive the American car industry with a “cash-for-clunkers” scheme has become embroiled in a row over government snooping.

The problems arose after the Department of Transportation claimed that when dealers logged on to the clunkers website their computers — and everything on them — become the property of the US Government.

Astonished dealers who were participating in the $1 billion scheme — which provides motorists with a credit of up to $4,500 towards a new car when they trade in a so-called “gas guzzler” that does 18 miles per gallon or worse — quickly posted online the Big Brother-style disclaimer from the cars.gov website.

“This application provides access to the Department of Transportation (DoT) CARS system,” the warning message read. “When logged on to the CARS system, your computer is considered a Federal computer system and is the property of the United States Government. Any or all uses of this system and all files on this system may be intercepted, monitored, recorded, copied, audited, inspected, and disclosed to authorised CARS, DoT, and law enforcement personnel, as well as authorised officials of other agencies, both domestic and foreign.

“By using this system, the user consents to such interception, monitoring, recording, copying, auditing, inspection, and disclosure at the discretion CARS or the DoT personnel.”

By the time the disclaimer had been circulated widely on blogs, posted on YouTube and become the subject of a ferocious on-air editorial by the conservative Fox News host Glenn Beck, the Department of Transportation had issued a statement saying that “we are working to revise the language”. No explanation was given as to why the original disclaimer was worded so aggressively.

Members of the general public do not need to log on to the website so were not asked to agree to the same conditions as dealers.

Mr Obama’s right-wing critics argue that the controversy is another example of the intrusiveness that will accompany the President’s plans to expand the role of government in the lives of Americans.

Supporters of Mr Obama counter that the Republicans are trying to heighten fears to score political points. Republicans, though, have pointed out that the Left was always quick to criticise the Bush Administration on matters of alleged privacy invasion.

“[Bush] was pilloried because the National Security Agency was monitoring phone calls from foreigners even though the intercepts involved national security, not domestic law enforcement,” said the Washington Times in an editorial. “[Yet] in this clunkers deal, the Government was claiming access to files on private computers.”

Mr Obama’s Car Allowance Rebate System was launched on July 1 after similarly structured programmes in the UK and Europe.

The US Environmental Protection Agency caused outrage by upgrading its efficiency estimates for many older cars from 18mpg to 19mpg, thus making them ineligible as trade-ins under the scheme.

The $1 billion that was set aside for the programme also ran out four months ahead of schedule. A $2 billion extension has since been signed into law.

In terms of generating new business for America’s beleaguered car industry, the US cash-for-clunkers programme has been a big success: more than 250,000 new cars have been sold so far under the scheme.

This week Ford reported a 2 per cent rise in US sales during July, its first year-on-year monthly sales increase since 2007.

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