CIO — The Federal Trade Commission endorsed an online do-not-track tool late last year, but its suggestion that a congressional mandate may be necessary got a cool reception from Republican lawmakers and some tech companies.

The option for an industry-led effort to create a universal, persistent do-not-track tool was left open, but Chairman Jon Leibowitz says Congress may have to step in if the industry doesn’t act fast.

The do-not-track tool, if it happens, would likely be implemented in Web browsers. CIOs of Web-based companies would likely not have to make changes to any user tracking methods, though some in Congress are interested in passing regulations that would curtail online data collection and tracking.

Some trade groups and companies have made serious attempts to help Web users control what data is collected about them and what targeted ads they receive, but there is still no universal do-not-track mechanism, despite years of calls for such a tool, according to Leibowitz.

Some House Republicans and representatives of Symantec (SYMC) and Time Warner Cable (TWC) raised questions about a do-not-track tool during the December hearing. Widespread blocking of targeted ads could cause significant damage to the online ad business and could bring an end to many free services online, some Republicans said.

Representative Steve Scalise, a Louisiana Republican, feels Web tracking can provide “valuable information” to websites and ad networks.

“These benefits are not just limited to businesses—consumers can enjoy a personalized Web experience and receive ads tailored to their interests without having to search through sales pitches,” he said. Behavioral advertising also “benefits the Internet itself, because it helps underwrite the cost of these sites that consumers enjoy, with many of the services provided for free.”

Meanwhile, the Direct Marketing Association (DMA) and four other advertising trade groups announced plans to roll out a program allowing Web users to opt out of tracking by 5,000 member companies. The groups hope the new program, scheduled to go live in early 2011, will show the FTC and Congress that there’s no need for government regulations, says Jerry Cerasale, the DMA’s senior vice president for government affairs.

Privacy groups have expressed doubts about self-regulatory proposals, saying they amount to the fox guarding the henhouse. Online tracking has become ubiquitous, says Susan Grant, director of consumer protection at the Consumer Federation of America.

Legislation is needed because “there are no limits to what types of information can be collected, how long it can be retained, with whom it can be shared, or how it can be used,” she says.