Chancellor Angela Merkel has defended Germany's BND intelligence agency against accusations it violated laws by helping the US spy on officials and firms in Europe and said her office would cooperate fully with a parliamentary investigation.

In her first public comments on the matter, Mrs Merkel said she still believed it was not acceptable for friendly nations to spy on each other -- a reference to her dismay in 2013 over reports the NSA had been tapping her cell phone.

"But on the other hand intelligence agencies are working to ensure the public's safety and the German government will do everything it can to ensure that it can carry out its job," she said.

"And this ability to carry out its duties in the face of international terrorism threats is done in cooperation with other intelligence agencies -- and that includes first and foremost the NSA."