By Michael Holden

LONDON (Reuters) - Britain's terrorism law watchdog said on Thursday the legal framework underpinning security services' ability to spy on the public's communications was fragmented, undemocratic and "in the long run intolerable."

David Anderson, Britain's independent reviewer of anti-terrorism laws, said the framework overseeing the interception of emails, phone calls and online activity by police and spies needed a major overhaul, and that the government needed to spell out why the authorities were pressing for even more powers.

However he said, while it should not be easy for the state to access communications, the intelligence agencies should be able to carry out the bulk interception of data.

"Each intrusive power must be shown to be necessary, clearly spelled out in law, limited in accordance with international human rights standards and subject to demanding and visible safeguards," said Anderson in a 373-page report for Prime Minister David Cameron.

A debate about how to protect privacy whilst ensuring the security agencies have the powers they need has raged since

former U.S. intelligence contractor Edward Snowden leaked details about mass surveillance by British and U.S spies.

Last week, U.S. President Barack Obama signed a law to amend a government surveillance program that had swept up millions of Americans' telephone records, in the first major legislative reform since the Snowden revelations two years ago.

Britain's security chiefs argue they are facing a capability gap because of technological advances, and say that their work has been severely hampered by Snowden's disclosures.

The head of Britain's GCHQ eavesdropping agency last year called on technology firms such as Twitter and Facebook to allow security services greater access to their networks, citing their huge importance to militant groups.

"We simply do not have the coverage which we had five years ago," said Sara Thornton, chairman of the National Police Chiefs' Council.

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"SNOOPERS' CHARTER"

Cameron, fresh from an election victory last month, has promised a swathe of new security measures, the most striking and controversial of which are plans to give police greater powers to monitor Britons' communications and web activities in what opponents have dubbed a "snoopers' charter".

Anderson said it was time for a "clean slate" describing the current system as confused, making it "undemocratic, unnecessary and – in the long run – intolerable".

He called for a new easily understood, comprehensive law with improved safeguards, and judges, not ministers, approving warrants to allow access to the content of emails, phone calls and other communications.

Any further powers, such as forcing service providers to keep details of all individuals' internet use, should only be allowed after a compelling case was made, he added.

He said that argument had not yet been made, and pointed out no other country he was aware of had or was seeking to retain all web browsing data.

However, Anderson did back allowing bulk collection of data, giving examples where it had been used to thwart militant attacks, including when spies had been alerted to one individual by monitoring Islamic State militants in Syria.

"This investigation quickly led to the suspect's arrest and prevented a bomb plot in mainland Europe which was materially ready to proceed," the report said.

Home Secretary Theresa May told parliament Anderson's recommendations would be taken into account before a draft bill was published late this year.

Privacy groups said Anderson's report showed that the system of oversight was flawed and needed total reform.

(editing by Stephen Addison)