A police force must stop using number plate recognition technology after a warning from the UK's data watchdog.
The Information Commissioner's Office said Hertfordshire Constabulary's use of cameras in and around the town of Royston was in breach of the law.
It said the force had failed to carry out required privacy impact checks.
The ICO's ruling may have wider significance for the gathering of number plate data in the UK.
"It is difficult to see why a small, rural town such as Royston requires cameras monitoring all traffic in and out of the town 24 hours a day," said Stephen Eckersley, the ICO's head of enforcement.
"The use of ANPR [automatic number plate recognition] cameras and other forms of surveillance must be proportionate to the problem it is trying to address.
"After detailed inquiries, including consideration of the information Hertfordshire Constabulary provided, we found that this simply wasn't the case in Royston."
The ICO added that the use of seven cameras had made it impossible for motorists to drive into the town without a record being kept of their journey. It noted the scheme had become known locally as "the ring of steel".
The police force has now been told it must take the equipment down unless it can justify its use.
Hertfordshire Constabulary said it would not appeal the ruling.
"The constabulary intends to continue using ANPR cameras, which deliver very substantial policing benefits, but also to ensure that its particular deployment of such cameras is - and is seen to be - fully justified," it said.
"We look forward to working with the commissioner to achieve those objectives."
The force added that it had carried out its own evaluation of why it had used the tech, but accepted it needed to do additional privacy checks.
Privacy concernsThe data regulator began investigating the use of number plate recognition in the town after a complaint in June 2011 by three civil liberties groups: No CCTV, Big Brother Watch and Privacy International.
"Royston police decided to track everyone without any clear reason," said Privacy International executive director Gus Hosein.
"Just because a technology enables mass surveillance, that doesn't mean that it is right to do so."
Number plate recognition is used by police forces around the world as a crime-fighting tool.
Earlier this week the American Civil Liberties Union (ACLU) highlighted its concerns about the "widespread collection" of vehicle data by US police.
Number plate surveillance could have a "chilling effect" on the way US citizens associate with each other and even discourage some people from meeting up, the civil liberties group said on Tuesday.
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