The Telegraph quoted Internet freedom activists as saying that the regime in Tehran has implemented highly sophisticated Internet surveillance technology and that an information "arms race" is now inevitable.
Tor, a free piece of software that allows anyone to connect to internet via a global private network that hides computer IP addresses, has been targeted by the regime to identify and locate dissidents.
It also encrypts the contents of users' internet communications, making eavesdropping on emails, Facebook, Twitter and other applications more difficult.
Tor network, the leading anti-surveillance technology online, connets around 250,000 computers across the world.
However, during the unrest in the Middle East in mid-Jan, the number of computers connected to the Tor network via one major Iranian broadband provider collapsed almost overnight from more than 11,000 to zero.
Investigations by the Tor Project have revealed that other encrypted traffic like internet banking was still flowing, indicating that Iranian authorities had for the first time found a way to identify and block only Tor connections.
"What they did was vastly to upgrade their capability," Andrew Lewman, executive director of the Tor Project said.