By Justyna Pawlak

BRUSSELS (Reuters) - The European Union will start talks with the United States in May on how to share information about citizens' cash transfers to help track terrorist suspects, in a revival of a deal that collapsed this year.

The EU wants to give U.S. counter-terrorism agencies access to data collected by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) in the 27-member bloc.

But sharing the information has become controversial in Europe because of concerns over privacy protection. The European Parliament in February vetoed a provisional agreement, citing what it called insufficient safeguards.

On Friday, EU interior ministers agreed to give a green light to the European Commission, the bloc's executive, to negotiate a new deal with more privacy measures. EU ministers are due to give the formal go-ahead on May 10.

"I can start exploratory talks in May ... and we intend to move as swiftly as possible," EU interior affairs chief Cecilia Malmstrom told a news conference.

"We hope to have a proposal ready by the end of June."

Under its new negotiation guidelines, the Commission wants U.S. investigators to seek permission to obtain specific data, and will ask for a right to terminate the deal if privacy safeguards are not respected.

Brussels also wants Washington to pledge to share data from the United States if the EU creates its own programme to track terrorist finances in the future.

But some issues remain controversial.

At the European Parliament this week, some members said they wanted the EU to obtain more assurances from the United States that EU citizens would have the right to complain if their data was misused.

There were concerns also over the fact that SWIFT provides data in bulk, meaning information about transfers not related to people suspected of terrorist activities can be passed on.

"The problem of mass data transfer has not been resolved," said Birgit Sippel, a Socialist deputy from Germany.

The European Commission and Washington are worried about security threats while investigators have no access to the information. Data transfers were possible until several months ago when SWIFT changed its server infrastructure.

The Spanish government, which holds the EU presidency between January and June this year, has said data transfers were used to investigate the 2004 train bombings in Madrid and helped thwart an attack on Barcelona.

(Reporting by Justyna Pawlak; Editing by Simon Cameron-Moore)