PARIS (AFP) - France has denied a report that it runs a vast electronic spying operation on its citizens, but newspaper Le Monde stuck by its story on Friday, warning that "French Big Brother is Watching".

Le Monde stirred up a hornet's nest on Thursday by claiming in an article that French intelligence services intercept all communications in the country, stocking telephone and computer data for years in what it said was an illegal operation.

The DGSE, France's external intelligence agency, "systematically collects electromagnetic signals emitted by computers in France, as well as the data feed between France and abroad: the entirety of our communications are being spied upon", said the report.

Data collected from telephone conversations, e-mails, text messages, Facebook and Twitter are then stored "for years" on a supercomputer where other security services can access them, it said.

Prime Minister Jean-Marc Ayrault's office said the impression of a sweeping surveillance operation was "inexact".

"Several services conduct monitoring operations for security reasons," an official from PM Ayrault's office said.

The official said the information could only be delved into "if the prime minister so decided after advice from the CNCIS", the National Commission of Security Interceptions Control.

The revelations came amid outrage in Europe over claims by US intelligence leaker Edward Snowden that European institutions were spied on by the National Security Agency's Prism programme.

France instantly reacted with outrage and even pushed for the European Union to delay talks with Washington on a huge free-trade pact that is slated to be the world's largest.

Le Monde said in an editorial on Friday that the spying was aimed at adapting to "new needs in the fight against terrorism and organised crime", but lamented "the end of private life, and the start of the end of democracy".

"Bin Laden has nourished Big Brother," it said.

The state is "evidently not in a position to read or listen to billions of communications", but "has a 'profile' of our private and professional lives".

The newspaper reiterated that any of the seven French intelligence agencies could access the information and called for "judicial and parliamentary counter-checks to restrain the immense power the government has acquired over our private lives".

But Socialist lawmaker Jean-Jacques Urvoas, who co-authored a report on the legal framework applicable to intelligence services, said the Le Monde article "hardly corresponds to the reality I know".

He said interceptions of French citizens' communication were by law subject to authorisation from the CNCIS and that data collected had to be destroyed after use.

"French citizens are therefore not subjected to massive and permanent espionage outside of the law," he said.