Germany has summoned the US ambassador in Berlin over claims that the US monitored German Chancellor Angela Merkel’s mobile phone.
Foreign minister Guido Westerwelle will meet US envoy John Emerson later in what is seen as an unusual step between close allies.
Mrs Merkel has demanded a “complete explanation” of the claims, which are threatening to overshadow an EU summit.
She discussed the issue with US President Barack Obama on Wednesday.
President Obama told Mrs Merkel the US was not monitoring her calls and would not in future, the White House said.
However, it left open the question of whether calls had been listened to in the past.
French President Francois Hollande had already called for the issue to be put on agenda of the summit – where EU leaders are due to discuss Europe’s digital economy, economic recovery and immigration – following reports that millions of French calls had been monitored.
Other leaders are also likely to want further clarification from Washington over the activities of its National Security Agency (NSA) in Europe, says BBC Europe Editor Gavin Hewitt.
State-monitoring of phone calls has a particular resonance in Germany – Mrs Merkel herself grew up in East Germany, where phone-tapping was pervasive.
Her spokesman said the German leader “views such practices… as completely unacceptable” and had demanded a “complete and comprehensive explanation”.
“Among close friends and partners, as the Federal Republic of Germany and the US have been for decades, there should be no such monitoring of the communications of a head of government,” said Steffen Seibert in a statement.
Veteran French European Commissioner Michel Barnier told the BBC “enough is enough” and that confidence in the US had been shaken.
Mr Barnier, the commissioner for internal market and services, said Europe must not be naive but develop its own strategic digital tools, such as a “European data cloud” independent of American oversight.
The BBC’s Stephen Evans in Berlin says Germany’s morning papers echo a sense of outrage.
A front-page commentary in Thursday’s Sueddeutscher Zeitung – one of the country’s most respected papers – refers to the “biggest affront”.
It says an attack on Angela Merkel’s mobile phone would be an attack on “her political heart”.
German Defence Minister Thomas de Maiziere said it would not be possible to go back to business as usual. This is more than a tiff which will blow over easily, our correspondent says.
In July, German media carried comments by Edward Snowden suggesting the US National Security Agency worked closely with Germany and other Western states on a “no questions asked” basis, monitoring German internet traffic, emails and phone calls.
“They [the NSA] are in bed with the Germans, just like with most other Western states,” Mr Snowden was quoted as saying by Der Spiegel magazine – though Mrs Merkel denied any knowledge of the collaboration.
In June, President Obama assured Chancellor Merkel that German citizens were not being routinely spied upon. At the time, she was criticised by her political opponents for not being more sceptical.