The parliamentary intelligence watchdog is to examine whether the laws on intercept of private communications are adequate to control the UK's spy agencies in the internet age.
A narrow inquiry by the Intelligence and Security Committee found GCHQ - the electronic eavesdropping agency - did not use a controversial US programme to gather information from the internet companies in order to circumvent UK laws.
The committee said that 197 counter-intelligence reports generated by GCHQ through the US Prism programme - exposed by former intelligence analyst Edward Snowden - had been properly signed off by ministers.
But in the face of widespread public concern over "snooping" by agencies on both sides of the Atlantic, the committee chairman, Sir Malcolm Rifkind, said they had decided to mount a wider investigation into the legislative framework governing the intercept of communications.
"The intelligence agencies can only operate under acts of Parliament. These are matters which they don't decide for themselves. That is a matter for government and for Parliament," he said.
The intercept activities of the agencies are governed by three pieces of legislation, the Intelligence Services Act 1994, the Human Rights Act 1998, and the Regulation of Investigatory Powers Act 2000. The committee, however, said that parts of the legislation were expressed only in "general terms" and it disclosed that GCHQ had found it necessary to put in place "more detailed policies and procedures" in order to ensure it complied with human rights laws.
Sir Malcolm said that so far they have only looked at the specific allegations of illegal behaviour by GCHQ arising from the disclosures by Mr Snowden, who is currently seeking asylum in Russia. The committee has not sought information about other claims made by Mr Snowden, including allegations that GCHQ is able to tap into the network of fibre optic cables carrying the world's telephone and internet traffic in an operation codenamed Tempora.
The committee was given the full list of the 197 counter-terrorism operations for which GCHQ obtained intelligence through Prism, as well as lists of UK nationals and individuals in the UK who were monitored and the "selectors" - such as email addresses - on which intelligence was requested.
It has also questioned GCHQ director Sir Iain Lobban "in detail" about the claims relating to Prism. It is due to question MI5 director general Andrew Parker when MPs return to Westminster after the summer break.
Shami Chakrabarti, director of civil rights group Liberty, said the committee's findings would do little to reassure the public, adding: "There's nothing to allay fears that industrial amounts of personal data are being shared under the Intelligence Services Act and concerns that all UK citizens are subject to blanket surveillance under GCHQ's Tempora programme aren't even mentioned. This spin-cycle is marked 'whitewash'."