Hague, who cancelled a trip to Washington to address parliament on the issue, said Britain's electronic eavesdropping agency GCHQ operated within a strict legal framework.
"It has been suggested that GCHQ uses our partnership with the United States to get around UK law, obtaining information that they cannot legally obtain in the United Kingdom," Hague said.
"I wish to be absolutely clear that this accusation is baseless."
The Guardian newspaper, which along with The Washington Post revealed details last week of two vast electronic surveillance programmes operated by the US National Security Agency (NSA), reported that GHCQ has had access to the Internet-monitoring scheme PRISM since at least June 2010.
"This is no casual process," Hague said.
"Every decision is based on extensive legal and policy advice. Warrants are legally required to be necessary, proportionate and carefully targeted."
He added: "We take great care to balance individual privacy with our duty to safeguard the public and the UK's national security."
Hague said that since the 1940s, the NSA and its forerunners have had a relationship with GCHQ that is "unique in the world".
"The growing and diffuse nature of threats from terrorists, criminals or espionage has only increased the importance of our intelligence relationship with the United States."
But asked by an opposition spokesman if it was possible that GCHQ has made mistakes and spied on innocent members of the public, Hague admitted: "Everyone is capable of error... there will always be ways of improving our procedures."
He insisted that the rules surrounding surveillance "minimise the chance of error" and praised GCHQ for its "professionalism, dedication and integrity".
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