Note that removing your Web History also pauses it. Web History will remain off until you enable it again.
[UPDATE 2/22/2012]: Note that disabling Web History in your Google account will not prevent Google from gathering and storing this information and using it for internal purposes. It also does not change the fact that any information gathered and stored by Google could be sought by law enforcement.
With Web History enabled, Google will keep these records indefinitely; with it disabled, they will be partially anonymized after 18 months, and certain kinds of uses, including sending you customized search results, will be prevented. If you want to do more to reduce the records Google keeps, the advice in EFF’s Six Tips to Protect Your Search Privacy white paper remains relevant.
If you have several Google accounts, you will need to do this for each of them.
– How to delete your Google Browsing History before new policy (Digital Journal, Feb. 24, 2012):
After the policy takes effect you are not allowed to opt out without abandoning Google altogether. But now before the policy takes effect, you have the option of deleting your Google Web History by modifying your settings so that Google is unable to associate data collected about you with your Gmail or YouTube accounts. Tech News Daily reports that Electronic Frontier Foundation (EFF), a nonprofit organization based in San Francisco that advocates for online privacy, says: “Search data can reveal particularly sensitive information about you, including facts about your location, interests, age, sexual orientation, religion, health concerns, and more.”
EFF advises all Google users to delete their web history.
Meanwhile, Center for Digital Democracy has filed a complaint with the Federal Trade Commission, asking the Commission to sue Google to stop the policy change.
Tech News Daily reports FTC can impose fines up to $16,000 per day for violation.