The UK's intelligence agency, GCHQ, did not circumvent or break any laws when accessing information via the US' controversial PRISM programme, which was recently exposed by ex-CIA worker and whistleblower Edward Snowden.
MPs of the Intelligence and Security Committee (ISC) said that it has reviewed reports that GCHQ produced on the basis of intelligence sought from the US and it is satisfied that the agency conformed to its statutory duties.
In each case, ISC said, a warrant for interception, signed by a Minister, was already in place. Reports had suggested that GCHQ had access to PRISM and to content of communications in the UK without proper authorisation.
Snowden caused a media storm and outrage amongst privacy advocates after he revealed that the US government obtains intelligence material (such as communications) from Internet Service Providers and internet companies, such as Google, Facebook, Microsoft and Apple.
He is currently holed up in Moscow airport trying to seek asylum from a number of countries.
Following the news and accusations against the UK government, ISC took detailed evidence from GCHQ, including oral evidence from the Director of GCHQ.
However, despite getting the all-clear, the committee's MPs also said that the current statutory framework governing access to private communications requires further scrutiny. It plans to do this by examining the complex interaction between the Intelligence Services Act, the Human Rights Act, and the Regulation of Investigatory Powers Act, and the policy and procedures that underpin them.
Foreign secretary William Hague welcomed the ISC's announcement.
"The Intelligence and Security Committee has today cleared GCHQ of the allegations of illegal activity made against it. The Committee has concluded that these allegations are "unfounded". I welcome these findings," said Hague.
"I see daily evidence of the integrity and high standards of the men and women of GCHQ. The ISC's findings are further testament to their professionalism and values. I have written to Sir Malcolm Rifkind (Chairman of ISC) to thank him for the Committee's prompt and thorough investigation."
He added: "The Intelligence and Security Committee is a vital part of the strong framework of democratic accountability and oversight governing the use of secret intelligence in the UK. It will continue to have the full cooperation of the Government and the security and intelligence agencies."