A United States intelligence agency has been collecting data on the phone calls of tens of millions of Americans, a report in USA Today has alleged.
Calls from both landlines and mobiles are reportedly being logged
The country's three biggest phone companies have been handing over call records to the National Security Agency (NSA) since 2001, the newspaper says.
President Bush refused to confirm or deny the existence of the programme.
He said he had authorised intelligence gathering in the wake of 9/11, adding that the activities were "lawful".
"Our intelligence activities strictly target al-Qaeda and their known affiliates," he said in a brief White House statement after the newspaper report appeared.
"The privacy of ordinary Americans is fiercely protected," he said, adding: "We are not mining or trolling through the personal lives of millions of innocent Americans."
The USA Today report does not claim the government listened in on phone calls.
But it cites an unnamed source as saying the NSA has used data on telephone calls to build "the largest database ever assembled in the world".
The New York Times reported in December that the NSA was eavesdropping on phone calls made between terror suspects inside the US and abroad.
The report caused controversy because many legal experts believe the government needs explicit permission from a special court to do so - which it did not obtain.
US senators reacted quickly to the USA Today allegation, saying they would order the phone companies to testify about it.
Senator Patrick Leahy was outraged by the report
Senator Patrick Leahy, the senior Democrat on the Senate judiciary committee, reacted with anger to the report, brandishing the newspaper in committee meeting.
"We need to know what our government is doing to spy upon Americans," he said.
But Republican senators suggested Mr Leahy was over-reacting.
They pointed out that the story did not allege wiretapping, only the creation of a database in order to analyse calling patterns.
Experts disagree about whether the government has the authority to demand the data it is allegedly compiling.
"I'm quite confident that if it's true it's illegal," Prof Michael Greenberger of the University of Maryland school of law told the BBC.
WHAT IS THE NSA?
US government intelligence service founded as a code-breaking agency in 1952
Intercepts communications using satellites and bugs
Said to be largest employer of mathematicians in the US
Budget and staff size classified
Agency as a whole is so secretive its initials are said to stand for "No Such Agency"
The communications act of 1934 bars companies from releasing information about callers, he said.
But the three phone companies in question - AT&T, Verizon, and BellSouth - all told USA Today they had not broken any laws.
Together the firms serve more than 200 million customers. A fourth company, Qwest, reportedly declined to participate in the programme.
A civil liberties group, the Electronic Frontier Foundation, filed suit against AT&T last month after a former AT&T employee indicated the company was engaging in the kind of data-mining the USA Today report described.
The Bush administration has asserted that the president has the authority to monitor communications in order to disrupt terrorist activity.
The report could derail Mr Bush's choice to head the CIA
Attorney General Alberto Gonzales has testified before the Senate in defence of the wiretapping programme of wiretapping disclosed by the New York Times last year.
The USA Today report comes at a potentially sensitive moment for the administration.
Gen Michael Hayden, the man who headed the NSA when the data-mining operation was allegedly launched, was nominated this week to head the CIA.
He is due to face confirmation hearings from the Senate soon.
Democratic Senator Dianne Feinstein warned the latest allegations would "present a growing impediment to the confirmation".
White House spokeswoman Dana Perino said the president was standing by his choice: "We're full steam ahead on the confirmation."