Files dated between 2008 and 2010 allegedly show a monitoring programme, known as "Optic Nerve", stored still images from Yahoo webcam chats and saved them to agency databases with the help of its US counterpart the National Security Agency.
GCHQ has consistently said its activities are necessary and "carried out in accordance with a strict legal and policy framework”.
The official Angry Birds website was defaced by hackers following a leaked National Security Agency document that claimed US and British spy agencies gain access to personal data from the mobile app.
Users trying to access the website late on Tuesday evening were met with an image of one of the Angry Bird characters with an NSA logo and the text "Spying Birds".
Rovia, the video game developer which created the game, denied collaborating with government agencies and sharing data.
"Rovio Entertainment Ltd, which is headquartered in Finland, does not share data, collaborate or collude with any government spy agencies such as NSA or GCHQ anywhere in the world," the firm said in a statement.
“Our fans’ trust is the most important thing for us and we take privacy extremely seriously," said Mikael Hed, CEO of Rovio Entertainment.
"As the alleged surveillance might be happening through third party advertising networks, the most important conversation to be had is how to ensure user privacy is protected," he said.
The Syrian Electronic Army (SEA), known for hacking the New York Times last year, claims an associated group was responsible for the hack.
"A friend hacked and defaced @Angrybirds website after reports confirms its spying on people. The attack was by 'Anti-NSA' Hacker," the SEA tweeted, adding "He sent an email to our official email with the link of the hacked website."
Responding to reports that UK and US intelligence agencies have been developing capabilities to take advantage of smartphone applications to gather users' private information, a spokesman for British intelligence agency GCHQ told the Guardian:
It is a longstanding policy that we do not comment on intelligence matters.
Furthermore, all of GCHQ's work is carried out in accordance with a strict legal and policy framework which ensures that our activities are authorised, necessary and proportionate, and that there is rigorous oversight, including from the Secretary of State, the Interception and Intelligence Services Commissioners and the Parliamentary Intelligence and Security Committee. All our operational processes rigorously support this position.
White House spokesman Jay Carney said US surveillance agencies were only interested in collecting data on people considered a threat to the United States.
Mr Carney told a regular White House news conference:
To the extent data is collected by the NSA [National Security Agency] through whatever means, we are not interested in the communications of people who are not valid foreign intelligence targets, and we are not after the information of ordinary Americans.
British intelligence agency GCHQ "would not confirm of deny the existence of the Squeaky Dolphin" monitoring programme, according to NBC News.
A spokesperson for the agency said GCHQ's work was "carried out in accordance with a strict legal and policy framework”.
This "ensure[s] that our activities are authorised, necessary and proportionate, and that there is rigorous oversight, including from the Secretary of State, the Interception and Intelligence Services Commissioners and the Parliamentary Intelligence and Security Committee", the spokesperson added.
The "Squeaky Dolphin" monitoring programme said to have been utilised by British intelligence agencies was not intended to spy on individuals, but it could be done, cyber-security experts told NBC News.
The experts claimed the documents released by Edward Snowden show GCHQ had to have been either physically able to tap the cables carrying the world’s internet traffic or able to use a third party to gain physical access to the massive stream of data.
Once the information has been gathered, intelligence agencies have the ability to extract some user information as well, they added.
US and British intelligence agencies have plotted ways to gather data from Angry Birds and other smartphone apps that "leak" users' personal information onto global networks, the Guardian reported, citing documents obtained from whistleblower Edward Snowden.
The US National Security Agency (NSA) and its British counterpart, the Government Communications Headquarters (GCHQ), had tried to exploit "leaky" smartphone apps that could disclose users' locations, age, gender and other personal information, according to the newspaper.
British intelligence agencies have the capacity to monitor social media sites such as Facebook and YouTube by tapping into the cables carrying the world's internet traffic, according to documents obtained by NBC News.
The documents, reportedly taken from the US National Security Agency by whistleblower Edward Snowden, show British spies demonstrated a pilot programme to their US counterparts in 2012.
The programme, called "Squeaky Dolphin", was able to monitor YouTube in real time, collect addresses and some other user information.
According to the “Psychology A New Kind of SIGDEV [Signals Development] presentation, the Government was also able to take part in “broad real-time monitoring of online activity” of URLs “liked” on Facebook, Blogspot/Blogger visits and Twitter.
US whistleblower Edward Snowden has alleged the National Security Agency went beyond its brief to spy on German companies that were rivalling American firms.
The intelligence leaker, who has been granted a year's asylum by Russia, made the claims in an interview with German television channel ARD.
Mr Snowden said: "If there is information at (German engineering firm) Siemens that (the NSA) think would be beneficial to the national interests, not the national security, of the United States, they will go after that information and they'll take it."
Mr Snowden also said during the interview that he believed US officials wanted to kill him after his series of leaks exposed a wide scope of security practices, including the bugging of international leaders' phones.