Feb. 4--SACRAMENTO -- Even as cost-conscious Gov. Arnold Schwarzenegger looks to trim state spending every way he can, officials at the Department of Motor Vehicles are planning to spend tens of millions of dollars on new driver's license technology.

And privacy advocates say finances are the least of the plan's problems.

The proposed $63 million contract includes facial recognition software that would allow the DMV to quickly compare an applicant's new photo against other photos in the agency's database in an effort to deter identity theft. The system could eventually include as many as 25 million images of drivers statewide.

Similar software is used in Oregon, New Mexico, Texas, Colorado and Georgia. California DMV officials say that by flagging applicants who already have a license under a different name, the software has led to a reduction in fraudulent licenses and identification cards by as much as 10 percent in those states.

But the five-year contract, which is being fast-tracked and could be approved as early as next month, is drawing objections from privacy advocates who fear state and local authorities could use the biometric technology to monitor the movements of "innocent people" -- for instance, spectators at a sporting event or an anti-war rally.

"What this would allow law enforcement to do is scan a crowd of folks, check that image against the database and have their names and addresses," said Valerie Smalls

Navarro of the American Civil Liberties Union in Sacramento.

The ACLU is fighting the proposal with a handful of other groups, including Consumers Union, the Electronic Frontier Foundation and the Consumer Federation of California, which says the plan poses "massive threats" to personal privacy.

"We see this as sort of creeping Big Brother government, an invasion of people's privacy," said Richard Holober, executive director of the San Mateo-based Consumer Federation of California.