A report by GCHQ to Parliament's Intelligence and Security Committee on the listening agency's links to a secret US spy programme is due shortly.
The Intelligence and Security Committee (ISC) will receive a report on claims that it received material through the secret Prism scheme "very shortly", according to chairman Sir Malcolm Rifkind.
"The ISC is aware of the allegations surrounding data obtained by GCHQ via the US Prism programme," Sir Malcolm said.
"The ISC will be receiving a full report from GCHQ very shortly and will decide what further action needs to be taken as soon as it receives that information."
This development came after allegations that thousands of Britons could have been spied on by GCHQ under a “chilling” link to a secret American operation covertly collecting data from the world’s largest internet companies.
David Cameron and Theresa May, the Home Secretary, faces cross-party demands to spell out details of links between the electronic eavesdropping centre in Cheltenham and the previously-unknown Prism programme operated by the National Security Agency (NSA).
The disclosure triggered a civil liberties storm as the information-sharing agreement had not been made known to Parliament or the public.
Ms May, who is determined to revive her own “snoopers’ charter” plans to require telecoms companies to collect data about people’s internet habits, will be confronted by MPs over the claims in the Commons on Monday.
Under Prism, American agents were able to glean data, including the contents of emails and web-chats, direct from the servers of major providers including Facebook, Google and Yahoo.
It emerged that some of the information had been passed to GCHQ, raising fears that the agency had been sidestepping the usual legal process for requesting intelligence material about UK nationals. The agency insists it operates within a “strict legal and policy framework”.
According to documents, GCHQ received 197 intelligence reports through the Prism system in the 12 months to May 2012, a rise of 137 per cent on the previous year.
Keith Vaz, the chairman of the Commons home affairs select committee, said he was writing to Ms May to demand an explanation.
He said: “I am astonished by these revelations which could involve the data of thousands of Britons. The most chilling aspect is that ordinary American citizens and potentially British citizens too were apparently unaware that their phone and online interactions could be watched. This seems to be the snooper's charter by the back door.”
The existence of the Prism programme was revealed by the Washington Post and the Guardian, which obtained a copy of a presentation to NSA agents on the extent of its reach.
Further classified documents released yesterday pointed to the British link, noting that “special programmes exist for GCHQ for focused Prism processing”, suggesting the agency may have been making requests for specific information.
A GCHQ spokesman said: “Our work is carried out in accordance with a strict legal and policy framework which ensures that our activities are authorised, necessary and that there is rigorous oversight, including from the Secretary of State, the Interception and Intelligence Services Commissioners and the Intelligence and Security Committee.”
A Government spokesman said he would “neither confirm nor deny” the claims about GCHQ and refused to disclose whether the subject was being discussed with the US authorities.
However, the senior Conservative MP, David Davis, said it was difficult to reconcile GCHQ’s statement that it was subject to proper scrutiny with Parliament’s ignorance of the programme.
He said: “In the absence of parliamentary knowledge approval by a secretary of state is a process of authorisation, not a process of holding to account. Since nobody knew it was happening at all there is no possibility of complaint.”
The Liberal Democrat MP Julian Huppert said he would be tabling a series of parliamentary questions about the GCHQ revelations on Monday and would be calling for a Commons statement from Ms May.
He said: "We have to understand exactly what information they have had and what the safeguards are. It's deeply, deeply alarming.”
The controversy has added to the pressure on Nick Clegg from Liberal Democrats not to allow Ms May to revive the “snooper’s charter” after the Woolwich terrorist attack. Gareth Epps, co-chair the Social Liberal Forum, said: “Instead of Theresa May forcing through expensive and intrusive legislation, there should be statement by the Government on the purpose and scope of data harvesting of British citizens under Prism.”
Concerns about the disclosures were also raised by the Information Commissioner’s Office. A spokesman said: “There are real issues about the extent to which US law enforcement agencies can access personal data of UK and other European citizens. Aspects of US law under which companies can be compelled to provide information to US agencies potentially conflict with European data protection law, including the UK’s own Data Protection Act.”
Nick Pickles of the civil liberties campaign group Big Brother Watch said questions needed to be asked at the "highest levels" to establish whether British citizens had had their privacy breached "without adherence to the proper legal process or any suspicion of wrongdoing".
James Blessing, chief technology officer of ISP Keycom, and a council member of the Internet Service Providers’ Association, described the leaked document describing the NSA programme as “really quite scary”.
He said: “If, as this document claims, the NSA has direct access to those servers – unfettered, unbroken access – the NSA can see anything anyone in the UK is doing without any safeguards or controls. It’s been shown that if people have unfettered access they have a propensity to go and look, they can’t help themselves and they will go and find things.”
Whitehall sources said established channels had long been used by GCHQ to request information from the US. However, that the UK service had no direct access to Prism or any similar intelligence gathering systems of the NSA. There were no UK personnel present even as part of any exchange programme when the system may have been used, they claimed.
According to US sources what is called telephone “metadata” gathered from the mobile telephone records of customers of Verizon by the NSA was almost certainly been passed on to GCHQ, although what was released remained at the discretion of the Americans.