The German government reacted to a wave of media reports that Merkel's mobile phone had been targeted for more than a decade by spies working out of the US embassy in Berlin and that the operation was carried out with the apparent knowledge of US President Barack Obama.
Foreign Minister Guido Westerwelle said in a statement that "German law applies on German soil", echoing a phrase uttered by Merkel last summer.
The law applies "to Germans and foreigners, to citizens and businesses, and also to diplomats and embassies," Westerwelle said.
Citing US intelligence sources, the Bild am Sonntag daily reported Sunday that Obama was informed of the spying programme by National Security Agency (NSA) director Keith Alexander in 2010, but did not ask that the programme be ended and even requested a full report on the chancellor.
Obama, however, assured Merkel during a phone conversation last Wednesday that he was not aware of the spying programme and would have stopped it if he had known, media reports said.
Germany plans to send a high-level delegation to the US in the next few days to discuss the spying allegations with the White House and US intelligence agencies.
The NSA eavesdropped on calls made with the phone provided to Merkel by her political party until July and even intercepted calls made on the secure phone that the German leader started using last summer, Bild am Sonntag reported.
In July, the chancellor swapped her Nokia for a government-issued encrypted Blackberry Z10.
The phone calls were intercepted by the 18 NSA employees working on the fourth floor of the US embassy in Berlin and reports were sent directly to the White House without first processing them at the spy agency's headquarters in Fort Meade, Maryland.
The weekly Der Spiegel reported that Merkel's cell phone has been on an NSA target list since 2002, three years before she took office.