Reports in German media earlier this week suggested that the US National Security Agency (NSA) tapped the German Chancellor's phone and intercepted some 70 million telephone calls in France between mid-December 2012 and mid-January 2013.

Speaking on Thursday night (24 October), Merkel told reporters that trust with the US had been "severely shaken" by the allegations, adding that "we are partners but this must rest on mutual trust and respect and this applies to the intelligence community."

A day after demanding an explanation from American President Obama about whether her phone had been hacked, Merkel added that "we have no firm, hard evidence but we have had no denial [either]."

She also hinted that the mobile phone paid for by her Christian Democrat party was likely to have been the line targeted.

For his part, French President Francois Hollande commented that it was “a rule of good conduct that you don’t bug the portable phones of people you meet regularly at international summits.”

Although Berlin and Paris are to lead the US intelligence talks, the door will be open for the other 26 EU countries to join.

Other EU states could also find themselves drawn into the row, after the Guardian newspaper claimed to have a memo showing that a US government official had given the NSA phone numbers of 35 world leaders for tracking in 2006.

Merkel, together with other European leaders, have so far resisted calls by European Parliament boss Martin Schulz to halt EU-US trade talks, which began in the summer, however.

Schulz, who told reporters on Thursday that it is time for "a pause for thought," suggested that opposition to a trans-Atlantic trade deal would grow if talks continued without full transparency on snooping.

Earlier this week, MEPs also called for the suspension of the Swift agreement, which involves the transfer of bank data between the US and the EU.

However, any suspension would require the agreement of the bloc's governments.

Meanwhile, the role of the UK's intelligence services was also questioned amid allegations that British services had snooped on the Italian government.

Schulz played down the suggestion of EU countries spying on each other.

"David Cameron doesn't need his secret services to know what Mrs Merkel is thinking, my impression is that they have a direct exchange," he quipped.