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The ruling by a judge in The Hague followed a similar decision in April by the European Union's top court that wiped out EU data collection legislation it deemed too broad and offering too few privacy safeguards.
The Security and Justice Ministry said it was considering an appeal.
Under the Dutch law, telephone companies were required to store information about all fixed and mobile phone calls for a year. Internet providers had to store information on their clients' Internet use for six months.
The written judgment by Judge G.P. van Ham conceded that scrapping the data storage "could have far-reaching consequences for investigating and prosecuting crimes" but added that this could not justify the privacy breaches the law entails.
The judge did not set a deadline for disposing of the data.
Privacy First, one of the organizations that took the government to court, said the ruling "will bring to an end years of massive privacy breaches" in the Netherlands.
The government said after last year's European court ruling that it would amend its law.
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