Financed by more than $20 million in government contracts, researchers are taking the first steps toward developing a system that could sift through the financial, telephone, travel and medical records of millions of people in hopes of identifying terrorists before they strike.

So far, the companies awarded contracts by the Defense Department are using only fabricated data in their work on the program, which is called Total Information Awareness.

The Pentagon’s technology chief, Pete Aldridge, has said the department is interested in tying together such privately held data as credit card records, bank transactions, car rental receipts and gun purchases, along with massive quantities of intelligence information already gathered by the federal government.

The project has met some resistance in Congress because of privacy concerns. Some lawmakers are pushing an amendment to a spending bill that would prohibit the system from ever gathering information on American citizens without a congressional vote approving it.

Meanwhile, contractors and researchers told The Associated Press that they have already been developing pieces of TIA. For example, Doug Lenat, president of Texas-based Cycorp, said his researchers had already built a system to identify phone-calling patterns as they might exist among potential terrorists overseas.

Other TIA contractors include defense giant Raytheon and Telcordia, a telecommunications company specializing in research and development. Several other companies have been waiting to finalize deals.

From the start, the idea of TIA has proven controversial, pitting national security worries against fears the government would run roughshod over individual privacy.

“We’re talking about the most expansive, far reaching surveillance program ever proposed. The Congress has got to take a stand here,” said Sen. Ron Wyden, D-Ore., who has led efforts to restrict TIA.

Peter Higgins, a consultant and former CIA chief information officer, said what officials wanted from TIA was a system that would use relevant private and government-compiled information to spot patterns or convergences.

For example, a government-collected list of every person treated for anthrax exposure could help find people plotting a biological attack. Even more useful: finding people on that list who also telephone terror hot spots.