US and British intelligence services reportedly operate a massive data interception and storage programme involving the email and online storage services of Google and Yahoo, used by hundreds of millions of users worldwide.
The latest revelations from National Security Agency whistleblower Edward Snowden came as German chancellor Angela Merkel's top security adviser pressed Washington officials yesterday for a "no-spy agreement" between the two countries.
Last week's disclosure that the NSA tapped the German leader's mobile phone were overshadowed by fresh revelations in the Washington Post about an NSA/GCHQ programme dubbed "Muscular".
Under the programme, the agencies reportedly tap connections between Google and Yahoo servers and siphon off millions of records for storage.
According to one document from last January, the programme reportedly intercepted and stored 181,280,466 records in the course of the previous month. This included both metadata – details of email senders and recipients – as well as message contents.
NSA director Gen Keith Alexander denied the reports yesterday, saying his agency was "not authorised to go into a US company's servers and take data".
The Washington Post reported the "Muscular" programme would be illegal in the US but was permitted as it operated overseas on the assumption that anyone using a foreign data link is a non-US citizen.
Another NSA programme, dubbed Prism, compels US technology companies to hand over data when requested.
Google told the Washington Post it was "troubled" by the allegations and said it was not aware of the activity. Yahoo said it had "strict controls" to protect its data centres and had not granted access to the NSA or other US agencies. The White House and NSA declined to confirm or deny the claims.
Hours earlier Dr Merkel's foreign policy adviser Christoph Heusgen held talks in Washington with the US national security adviser Susan Rice and President Barack Obama's anti-terrorism adviser, Lisa Monaco.
German officials said talks would focus on a no-spy agreement and press for clarification on how long Mr Obama was aware of an 11-year surveillance of Dr Merkel's mobile phone.
The White House has indicated Mr Obama was only made aware earlier this year – and put an end to it.
But on Tuesday, Mr James Clapper jnr, the director of US intelligence, told the House Intelligence Committee senior White House officials were informed of surveillance it conducted in foreign countries.
In testimony, Gen Alexander rejected suggestions the agency trawled for information on ordinary citizens – and a reported 35 world leaders – without the Washington knowledge.
He dismissed as "completely false" claims that it collated phone data from France, Spain and Italy, saying it had been provided at least in part, by their domestic intelligence services.
Separately, Italian magazine Panorama reported yesterday the Vatican was a target of NSA surveillance earlier this year.