In a letter to the public safety minister and the head of the Canadian Security Intelligence Service, Amnesty International Canada says the policy "is in direct contravention" of Canada's international obligations to prevent brutalization of prisoners.
The government directive outlines instructions for deciding whether to share information when there is a "substantial risk" that doing so might result in someone in custody being abused.
It also entrenches an earlier policy dictating that protection of life and property be the key considerations when deciding on the use of information that may have been extracted through torture.
A copy of the July 2011 document was recently released under the Access to Information Act. Though unclassified, it had not been made public previously.
Inappropriate sharing of information by Canadian authorities contributed to the torture of Arab-Canadians in Syria in the period following 9-11, points out the letter signed by Amnesty Canada's secretary general, Alex Neve.
A resulting federal inquiry into the case of Ottawa engineer Maher Arar recommended that information never be provided to a foreign country where there is a credible risk that it will cause or contribute to the use of torture.
The fact the new federal policy on information sharing may be limited to exceptional circumstances involving public safety concerns "is no justification as international law does not allow or excuse the use of torture in any circumstances," says the letter.
"Governments are of course obligated to take action to respond to terrorist and other threats to public safety. But they must do so in ways that do not cause, contribute to or condone torture."
Opposition MPs have roundly denounced the directive, saying there can be no compromise on torture.
The provisions in the directive are "not acceptable to most Canadians," said NDP public safety critic Jasbir Sandhu.
"We don't use information from torture," Sandhu said Tuesday in an interview.
"I can tell you, Canadians didn't vote for this sort of hidden agenda."
The federal government says that although it stands by the directive, it does not condone torture and strongly opposes the mistreatment of any individual.