If confirmed, the allegations released by a US ex-intelligence technician who also exposed secret US data gathering programmes, would be a "catastrophe," said Justice Minister Sabine Leutheusser-Schnarrenberger.
"The allegations against Great Britain sound like a nightmare out of Hollywood," she said.
"European institutions should shed light on this immediately."
The Guardian today published claims that Britain's Government Communications Headquarters (GCHQ) has started processing vast amounts of personal information -- including Facebook posts, emails, Internet histories and phone calls -- and is sharing it with its US partner the National Security Agency (NSA).
The newspaper got the information from Ed Snowden, a former US intelligence technician who has also exposed secret US data gathering.
The latest claims sparked a fresh outcry from privacy campaigners and surfaced as Washington filed criminal charges against 30-year-old Snowden and asked Hong Kong -- where he has fled to -- to detain him.