UK-based car insurance firm Admiral has withheld plans to launch its Firstcarquote app, after Facebook opposed its plan to use social media profiles for setting car insurance prices.

The plan, which was aimed at young motorists aged 17 to 21, was to offer insurance discounts to first-time motorists using Facebook status updates and likes.

The launch of the new application was halted just hours before its official launch after the social media website company said that Admiral’s decision would breach Facebook’s privacy policies.

"We have made sure anyone using this app is protected by our guidelines and that no Facebook user data is used to assess their eligibility."

As per Facebook’s platform policy, firms are not allowed to use the site’s data to “make decisions about eligibility, including whether to approve or reject an application or how much interest to charge on a loan.”

A Facebook spokesman was quoted by The Telegraph as saying: "Protecting the privacy of the people on Facebook is of utmost importance to us.

"We have clear guidelines that prevent information being obtained from Facebook from being used to make decisions about eligibility.

"We have made sure anyone using this app is protected by our guidelines and that no Facebook user data is used to assess their eligibility.

"Facebook accounts will only be used for login and verification purposes.

"Our understanding is that Admiral will then ask users who sign up to answer questions which will be used to assess their eligibility."

The insurance company firm also faced criticism from privacy campaigners, who labelled the plan 'intrusive' and 'inappropriate'.

Admiral said that the app would now have “reduced functionality” and would only use the social network to log onto the Firstcarquote app.