Google has denied reports that it allowed the US government access to its servers, saying it had not heard of "a programme called prism until yesterday."
The search engine said the US government "does not have direct access or a 'back door' to the information stored in our data centres" and added: "press reports that suggest that Google is providing open-ended access to our users' data are false, period."
The joint statement was issued by Google's chief executive Larry Page and chief legal officer David Drummond and said: "We have not joined any programme that would give the US government - or any other government - direct access to our servers.
"We provide user data to governments only in accordance with the law. Our legal team reviews each and every request, and frequently pushes back when requests are overly broad or don't follow the correct process."
The existence of the Prism system was disclosed in earlier reports by The Guardian and The Washington Post.
It is said to give the NSA and the FBI easy access to the systems of nine of the world's top internet companies, including Google, Facebook, Microsoft, Apple, Yahoo and Skype.
The Guardian reported on Friday that it had seen documents showing that GCHQ had access to the system, set up by America's National Security Agency (NSA), since at least June 2010.
According to the newspaper, the Prism programme appeared to allow GCHQ to circumvent the formal legal process required to obtain personal material, such as emails, photographs and videos, from internet companies based outside the UK.
It was reportedly established in 2007 under changes to US surveillance laws passed under President George Bush and renewed last year under Barack Obama in order to provide in depth surveillance on live communications and stored information on foreigners overseas.
According to the leaked document, "special programmes for GCHQ exist for focused Prism processing" - suggesting the British agency may have been receiving material from a part of the programme specifically designed to meet its needs.
Ministers are facing growing calls to come to the Commons to explain Britain's links with the controversial US internet monitoring programme.
Labour is demanding Foreign Secretary William Hague answer questions from MPs about the claims eavesdropping agency GCHQ received material through the secret Prism scheme.
Meanwhile, the Intelligence and Security Committee (ISC) has said it expects a full report from GCHQ on the situation "very shortly".
The British agency, based at Cheltenham, was said to have generated 197 intelligence reports through the system in the 12 months to May 2012 - a 137% increase on the previous year.
GCHQ refused to comment directly on the report, but in a statement it insisted that it operated within a "strict legal and policy framework".
"GCHQ takes its obligations under the law very seriously," the statement said.
"Our work is carried out in accordance with a strict legal and policy framework which ensures that our activities are authorised, necessary and proportionate, and that there is rigorous oversight, including from the Secretary of State, the Interception and Intelligence Services Commissioners and the Intelligence and Security Committee."
ISC chairman Sir Malcolm Rifkind said last night: "The ISC is aware of the allegations surrounding data obtained by GCHQ via the US Prism programme.
"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."
Shadow foreign secretary Douglas Alexander said: "Our intelligence agencies do vital work to keep our country safe from harm, but it is also vital that they operate within a framework of legality and accountability.
"These reports have raised serious public concern, so I am now calling on the Foreign Secretary, William Hague, to come to the Commons on Monday to make an urgent statement to MPs.
"In that statement he must explain the Government's position and tell MPs how the Government will work with the Intelligence and Security Committee to address these public concerns."
Shadow home secretary Yvette Cooper added: "The intelligence agencies need to be able to get information from abroad especially in their vital work against terrorist threats, but it must be within the legal framework agreed by Parliament so there are proper safeguards in place.
"The Government also needs to set out clearly what legal framework governs the UK relationship with the Prism programme, what role ministers play, what the safeguards and scrutiny are.
"They need to explain how this relates to long standing legal requirements for warrants and inspection by the Intercept Commissioner.
"And the Home Secretary needs to provide full information to the ISC on the Home Office use of the Prism programme, what procedures have been followed including ministerial warrants and the nature of the intelligence gathered."
Former shadow home secretary David Davis said the monitoring programme appeared to allow the state to "spy on who they like".
He told Sky News that if reports of the scheme were accurate then "it is actually quite a scandal".
The Tory MP added that he suspected Home Secretary Theresa May and Foreign Secretary William Hague previously knew about the Prism.
"Presumably they at least would have had to sign an authorisation for this to take place," he said.
"(There were) nearly 200 British citizens under surveillance of one sort or other in one year, so they must have known something about it."
Facebook CEO Mark Zuckerberg also issued a fiery statement denying his company's involvement with Prism, in wording similar to Google's. He posted as his status on Friday.
"I want to respond personally to the outrageous press reports about PRISM:
Facebook is not and has never been part of any program to give the US or any other government direct access to our servers. We have never received a blanket request or court order from any government agency asking for information or metadata in bulk, like the one Verizon reportedly received. And if we did, we would fight it aggressively. We hadn't even heard of PRISM before yesterday.
When governments ask Facebook for data, we review each request carefully to make sure they always follow the correct processes and all applicable laws, and then only provide the information if is required by law. We will continue fighting aggressively to keep your information safe and secure.
We strongly encourage all governments to be much more transparent about all programs aimed at keeping the public safe. It's the only way to protect everyone's civil liberties and create the safe and free society we all want over the long term."