P3P stands for Platform for Privacy Preferences, an industry standard developed by the World Wide Web Consortium (W3C). The privacy policy of a website describes how it handles personal information about its users. P3P-enabled websites make this information available in a standard, machine-readable format. P3P-enabled browsers like Internet Explorer can "read" this information automatically. (Select View » Privacy Report.) P3P enhances user control by putting privacy policies where users can find them, in a form users can understand, and, most importantly, enables users to act on what they see.

For P3P compliance, you need the following files on your website.

1. A policy statement file in HTML format. You must have already created this file on your website. There are no restrictions on the format of this file. So, create one that is just like any other page on your website but make sure that it outlines your website's privacy policy adequately.
2. A policy reference file in XML format named as P3P.xml file. This file will be generated for you. You will have to place this file in a folder named W3C under the root folder of your website.^*
3. A compact policy file in XML format named as privacy.xml. This file will be generated for you. You can place this file anywhere on your website.

* - W3C is a well known location that user agents, such as browsers, automatically check to find the policy reference file. If you are unable to create this folder under the root (a situation common for weblogs and free home-page sites), you can use a P3P link tag in your web pages.

To generate the P3P-compliance files, fill up this form and click the Generate Files button. Do note that this form does not check the correctness of the information that you enter. So, all mistakes are yours. ;-)