The British Government has been urged to follow Barack Obama's example in increasing the oversight and accountability of intelligence agencies.
The US president announced changes to the way phone records were collected by the nation's spies following a string of revelations about the National Security Agency (NSA) by whistleblower Edward Snowden.
Mr Obama said i ntelligence officials have not intentionally abused the capabilities to invade privacy but promised to end the program "as it currently exists".
Following disclosures that German Chancellor Angela Merkel had her phone monitored by the NSA, Mr Obama promised that the communications of leaders of "close friends and allies" would not be targeted again.
"The bottom line is that people around the world - regardless of their nationality - should know that the United States is not spying on ordinary people who don't threaten our national security, and that we take their privacy concerns into account. This applies to foreign leaders as well," he said.
"The leaders of our close friends and allies deserve to know that if I want to learn what they think about an issue, I will pick up the phone and call them, rather than turning to surveillance."
Under the reforms the NSA will be required to get a court's permission before accessing phone records that are collected from hundreds of millions of Americans, except in emergencies, and the scope of inquiries will also be limited.
As part of his package of reforms Mr Obama is also proposing to extend to foreigners some protections against spying that US citizens enjoy.
Nick Pickles, the director of privacy campaigners Big Brother Watch, said: "President Obama recognised public debate had been insufficient and that law has failed to keep pace with technological change. Both of these issues are more pronounced in Britain, but go unaddressed by the agencies.
"What is clear is that Britain already lagged behind the United States in terms of surveillance oversight and accountability, with no involvement of courts or meaningful transparency. That gap is set to widen further still and that should be a call to action for Parliament.
"President Obama emphasised the need for judicial oversight by courts, greater transparency by the Government and companies and for the legal basis of surveillance programmes to be public. All of these issues should be pursued in Britain to protect our privacy and our economy."
Mr Obama's comments came as William Hague insisted that he has seen no evidence of breaches in the UK's protection of the privacy of individuals' communications, following reports that British spies are able to look at texts scooped up in a secret NSA operation which collects hundreds of millions of messages.
The allegations, resulting from the latest leaks by Mr Snowden, were made by Channel 4 News and the Guardian, who have seen a classified 2011 presentation discussing Dishfire, a secret database created by the US National Security Agency (NSA) that collects nearly 200 million texts every day from around the world.
Reports suggested that Dishfire stores the messages for future use and British spies - who face tough laws restricting interception of communications in the UK - have been given a back door to exploit that information.
Mr Hague declined to comment directly on the new allegations, but told BBC Radio 4's Today programme: "I set out in June, when these controversies first arose, the position in the United Kingdom, the very, very strong legal checks and balances that we have in the UK.
"I'm not going to comment on the detail of any allegations or leaks or alleged leaks. I can't possibly do that. But I can say what I said on June 10 to Parliament about our legal system, about the very strong system of checks and balances, of warrants being required from me or the Home Secretary to intercept the content of the communications of anyone within the United Kingdom.
"That system is not breached. I've never seen anything to suggest that system is breached. We have perhaps the strongest system in the world, in which not only do I and the Home Secretary oversee these things, there are then commissioners - the interception of communications commissioner, for instance - who oversee our work and report to the Prime Minister on how we do that.
"No country has a stronger system than that."
According to reports, Dishfire traces people when they take their mobile phone abroad by capturing the welcome text message from phone companies triggered by their arrival overseas, telling agents where they were and when they got there.
It is claimed the texts help the NSA to track people's whereabouts, their contacts, their banking details and their movements if they travelled from country to country.
Under US law, the American spies had to delete the data for its own citizens but texts coming to and from international mobile phones - including those belonging to Britons - were fair game and could be spied upon at will.
On British soil, spy agencies can only access text message data of specific targets with permission under the Regulation of Investigatory Powers Act (Ripa), and if they want to see the content of the message they must get a warrant from a secretary of state.
By contrast Dishfire collects data on everyone, so by accessing the system, British spies can pull out information they would not be entitled to under strict British laws.
The UK's eavesdropping agency GCHQ said: "All of GCHQ's work is carried out in accordance with the strict legal and policy framework which ensures that our activities are authorised, necessary and proportionate and that there is rigorous oversight."
Mr Snowden, a former NSA contractor, is now hiding in Russia after leaking classified US government documents.
Shadow foreign secretary Douglas Alexander said: "I welcome President Obama's acknowledgement of the need for a full and public debate. His recommendations reflect the widespread concern in the US about the oversight of the NSA.
"The very fact that President Obama has examined these issues is evidence that a debate is already under way in the US. So it is understandable that people here in the UK will welcome similar discussions of these issues.
"In the past some politicians may have been satisfied with their assumption that the security services were being held properly accountable. Today it is not enough for oversight to be working effectively, it has also to be seen by the public to be working effectively and it is the responsibility of the government to ensure that this standard is being met.
"Whilst of course the legal, accountability, and representative structures in the US are different from those that we have here in Britain, there is a need for a wider debate here in the UK about what ongoing reforms could be put in place to uphold effective oversight and accountability."