Human-rights organisation Liberty said that although the hard line on harassment announced last week was aimed at anti-vivisection protesters, the measures were so broad that they could be used against any form of protest.
The plans include amending the Protection from Harassment Act 1997 to stop the intimidation of staff at animal-testing laboratories, and giving police powers to arrest individuals protesting outside someone's home.
Liberty director Shami Chakrabarti warned: "People have every right to be protected from harm and harassment, but this offence seems capable of catching the innocent and the menacing alike."
There are also fears that companies could pick up on changes to the definition of harassment to use the new legislation to bring mainstream campaigners to court for staging protests against them.
"Some aspects of the proposals are ambiguous and risk blurring the boundaries between harassment and legitimate protest," said Wendy Higgins, campaigns director at the British Union for the Abolition of Vivisection.
She claimed the changes could affect all direct-action campaigning organisations including Greenpeace and Friends of the Earth.
The Government proposes to extend the Act to cover harassment of two or more people who are connected, to allow staff from the same company to press charges as a group. Each claimant need only have been harassed on one occasion in order to proceed to court.
"The Government is demonising animal-rights protesters," said Andrew Butler, campaigner at anti-vivisection charity Peta. "It is a blow to the movement when they use loaded terms such as 'terrorism' to describe what we do because it undermines all the good work we have achieved so far".
Neil Addison, barrister at the New Bailey in Liverpool and expert on harassment law, claims the law is predominantly about political rhetoric.
"It is a matter of implementing the laws that are already in place, not creating new ones," he said.
Commenting on the new proposals, Home Office Minister Caroline Flint said: "The Government intends to put a stop to the animal extremists' reign of terror."