US whistleblower Edward Snowden revealed recently that the National Security Agency programme had cooperated with German intelligence services in the programme.
The German government denied that the electronic communications of citizens and politicians were being tracked on a massive scale in the country where privacy laws are among the world's strictest.
German activists, including the Pirate Party and the Occupy movement, formed an alliance to host the demonstrations under the slogan "Stop Watching Us."
Demonstrations were organized in 30 cities and towns. Around 2,000 people took part in the demonstration in the port city of Hamburg.
In Frankfurt, where organizers had expected 5,000 demonstrators, police gave an initial estimate of 850.
German intelligence agencies fully upheld German law, Chancellor Angela Merkel's chief of staff insisted on Thursday, seeking to limit the damage after allegations German spies were in cahoots with US agents and knew of their mass surveillance.
Media reports of the United States National Security Agency's electronic spying operation have angered Germans and put Merkel and her officials on the defensive when pressed to explain what, if anything, they knew and how they intend to call Washington to account.
Merkel's chief of staff, Ronald Pofalla, responsible for Germany's intelligence agencies, spent three hours before a confidential cross-party parliamentary committee, where he was grilled on how much German spies knew about the U.S. spying operation codenamed Prism.
"I'm pleased we met today because we could answer the accusations against the German agencies in detail, and it is clear that they follow the law," he said after the meeting.
Only twice did U.S. agents give data records to the Germans on two kidnapped Germans they were trying to free, he said.
Last month, the United States confirmed the existence of an operation codenamed Prism after ex-spy agency contractor Edward Snowden revealed that it mines data from users of Google, Facebook, Skype and other U.S. companies.
Protecting personal data is generally a more sensitive issue in Europe than in the U.S. — and particularly in Germany, not least because of memories of surveillance and repression by communist East Germany’s secret police, the Stasi and the Nazis’ Gestapo.
The committee's chairman, opposition Social Democrats (SPD) parliamentarian Thomas Oppermann, however, argued that nothing had been achieved on Thursday. "We've made no progress whatsoever," he said, adding that either the government is not being forthright or "the left hand does not know what the right hand is doing."
Merkel is under pressure to toughen her stance against Washington and convince a country highly sensitive to data protection and citizens' privacy she takes the issue seriously.
Opposition members of the committee said they still had no real answers on what the NSA did.
German Chancellor Angela Merkel has come out strongly in favour of an international agreement to protect electronic data, following revelations by fugitive former intelligence analyst Edward Snowden about US surveillance programme PRISM.
"We should be able, in the 21st century, to sign global agreements," Merkel told the weekly Welt am Sonntag, in an interview to be published Sunday.
"If digital communication raises new questions worldwide, then we should take up the challenge. Germany is working for that," she said when asked whether an agreement modelled on the Kyoto Protocol that sets binding obligations on industrialised countries to reduce emissions of greenhouse gases was possible.
"This must be our goal, however ambitious it may be."
Merkel, who faces re-election in September 22 elections, has been under pressure for weeks to come clean with voters on what she knew about the US online surveillance.
She remains the frontrunner for the vote, and a new poll suggests the snooping affair is not yet a major election issue - but the opposition hopes this will change while the media are turning increasingly hostile.
The issue is sensitive for Merkel, who said last week she only learnt about the scope of the US National Security Agency (NSA) snooping through media reports.
Many Germans are angry that their emails, phone calls, web searches and other data have been captured and stored under the NSA programme.
In an interview with public ZDF television, Interior Minister Hans-Peter Friedrich called on the United States on Friday to provide detailed information on the NSA's PRISM programme.
He said experts from several European countries and the United States would meet in Brussels on Monday to discuss the issue.
Snowden, whose passport has been revoked by Washington, has been marooned in Moscow airport's transit zone for the past three weeks, as he seeks asylum in a bid to evade US espionage charges for his leaks.
The Foreign Ministry and the Ministry of Interior of Germany have examined the issue of a possible granting of asylum to the former US intelligence employee Edward Snowden, said German Chancellor Angela Merkel.
"There are no preconditions for that. Germany is a legal state," the Chancellor emphasized.
German Chancellor Angela Merkel is stepping up efforts to head off the threat posed to her re-election bid by the scandal surrounding allegations of rampant US surveillance of Europe's communication networks.
Instead of Germany's solid economic performance and Merkel's deft handling of the euro debt crisis, the campaign for the September 22 election has been dominated recently by claims that her government knew the US was collating information from online services in Europe.
The uproar in Germany was triggered by US whistleblower Edward Snowden's disclosures that the US National Security Agency (NSA) was spying on allied governments and their citizens through the so-called PRISM programme.
In addition to speaking to US President Barack Obama on the issue, Merkel has also called for strict European Union rules on the protection of personal data and demanded that US intelligence services adhere to German law.
"The chancellor sees her job and her duty to protect German citizens," her spokesman said Wednesday. This includes both providing personal security and protecting people's private lives, he said.
Having so far failed to dent Merkel's commanding lead in opinion polls, the opposition Social Democrats (SPD) and Greens have seized on the stream of claims about the US intelligence service collecting information from telephones, emails and internet searches.
The opposition has moved to increase the pressure on Merkel by portraying her as having mishandled the scandal and not protected German data from international spying agencies.
Underlying the risks for Merkel have been attempts by the junior member of her coalition, the liberal Free Democrats (FDP), to bolster their weak poll numbers by taking the high ground on the issue.
The internet activist Pirate Party hopes the anger in Germany about the US snooping claims might translate into votes for them in September.
"(Germany) is going down the wrong road," warned the party's general secretary, Katharina Nocun, this week. "We are in danger of sacrificing democracy."
Opinion polls so far show that the revelations about the global eavesdropping by the United States have had little effect on the German election campaign.