Obama vows to 'listen' to European critics on Internet snooping

"For the German people it is important and necessary to debate these issues. People have concerns that there may some kind of a blanket, across-the-board gathering of information. And there are questions that have not yet been answered sufficiently, so the dialogue will continue," Merkel said.

While admitting that some of these covert intelligence-gathering programmes have helped thwart terrorist attacks, Merkel underlined the "need for proportionality" in surveillance by US intelligence services.

For his part, Obama said the surveillance is limited in scope and overseen by judges.

But he vowed to "listen to critics" and to have an "open debate" about it.

He explained that the programme is only aimed at finding leads on potential terrorist attacks, for instance "if someone from New York or Berlin called Osama Bin Laden's number."

Over 50 "threats" have been averted, not only in the US, but also in Europe, as a result of the operations, Obama said.

The US President denied that his secret services can access the emails or Facebook accounts of anyone in the world, as claimed by CIA whistleblower Edward Snowden earlier this month.

"This is not a situation in which we are rifling through the ordinary emails of German citizens or American citizens or French citizens or anybody else," Obama said.

"This is not a situation where we simply go into the Internet and start searching any way that we want. This is a circumscribed, narrow system directed at us being able to protect our people. And all of it is done under the oversight of the courts," he added.

Citing James Madison, one of the first presidents of the United States, Obama later in a speech at the Brandenburg Gate said the US cannot endure a state of "perpetual war."

He indicated that this entails closing the US' extra-judicial detention centre for terrorist suspects in Guantanamo, Cuba.

He said this also means "balancing the pursuit of security with the protection of privacy."

"I’m confident that that balance can be struck. I’m confident of that, and I’m confident that working with Germany, we can keep each other safe while at the same time maintaining those essential values for which we fought for," Obama noted.

Small protests against the Prism programme have been taking place in Berlin over the past two days.

The rallies came after leaked files show that the US did more spying on Germany than any other EU country.

For its part, he Internet-freedom-loving Pirate Party gathered about 100 people on Wednesday at the same spot where Obama first spoke in Berlin in 2008, a victory column two kilometres down the road from Obama's main venue this time around.