Erdogan has accused rivals in the influential Gulen group of acting as a "state within a state" seeking to topple his government by instigating a high-level corruption investigation against close allies.
Yesterday pro-government dailies Yenisafak and Star said classified documents revealing the surveillance were discovered by new prosecutors appointed after a mass purge of the police and prosecution service in the wake of the corruption probe launched in December.
Cabinet ministers, the country's spy chief and journalists were among the targets, according to the reports, which government spokesman Bulent Arinc confirmed to journalists.
Media sympathetic to Gulen quoted his lawyer Nurullah Albayrak as saying the allegations were "unfair". "The only purpose of this situation is to incite hatred and division," he said.
One of the former prosecutors Adnan Cimen also denied that anything illegal had taken place.
"These allegations are entirely without foundation. Not a single illegal operation was authorised," Cimen told newspaper Milliyet.
The Star reported that so-called Gulenists had wiretapped more than 7,000 people, as well as the headquarters of the opposition Republic People's Party (RPP), since 2011 on the pretext of trying to uncover terrorism plots.
Intelligence chief Hakan Fidan and one of his close allies were also among those targeted, along with many business people, activists and journalists, according to the newspaper reports.
Faruk Logoglu, a vice-president of the RPP who was reportedly one of those targeted, dismissed the claims as an attempt by Erdogan to "support his rhetoric about a parallel state that he uses against the Gulen movement".
The corruption scandal has thrown up one of the most serious challenges to Erdogan's 11 years in power ahead of key local elections in March.
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