The European Union directive, known as the Data Retention Directive, was approved by Brussels in March 2006, but Sweden has yet to implement the measure more than three years after its passage.
The Swedish government conceded to the court that it had not fulfilled its obligations and assured the court that the EU directive 2006/24 can be expected to pass into Swedish law on April 1st 2010.
But hours after the verdict was made public, Justice Minister Beatrice Ask told news agency TT that the government would not be preparing a legislative proposal on the issue prior to this autumn's general election.
"The extent to which private companies should be forced to store information about the activities of individuals is an important matter of principle. That's exactly what this is about," Ask told news agency TT.
The minister added that the government would at least wait until the completion of an inquiry into police methods, the findings of which are expected to come at the start of the summer.
The Commission decided in April 2009 to file a suit against Sweden in the European Court of Justice and the court published its decision against Sweden on Thursday.
The Data Retention Directive was championed by former Social Democratic justice minister Thomas Bodström, but the centre-right government has declined to present the legislation to parliament.
"It's no secret that I wasn't very fond of the proposal when it was initiated and I think there is good reason to exercise a certain amount of caution when it comes to gathering information," said Ask.
On two previous occasions, the Commission has questioned why Sweden delayed implementing the law, with the government claiming it was too busy working on the Treaty of Lisbon to turn its attention toward the directive.
Sweden has been told to pay court costs, in accordance with EU praxis.
The measure stipulates that telecom operators store data about customers' telephone calls, as well as information about text messages and emails.
The directive was passed in the wake of the Madrid and London terrorist bombings. Seen as an important tool in combating terrorism, it raised concerns from privacy advocates.