Despite a Lib Dem refusal to give further powers to the security agencies, the coalition has handed over an extra £100m

David Cameron will step up his public support for Britain’s intelligence agencies as they demand greater powers to help fight Islamist extremism amid continuing coalition differences over the extent of state surveillance, Downing Street has confirmed.

As the head of MI5, Andrew Parker, warned that the threat to Britain has worsened, Downing Street said the prime minister would make the case that the government needs to work closely with the agencies on the powers they need. On Thursday, Parker called for new powers to help fight Islamist extremism following the terrorist attacks in Paris, where 12 people died following an assault on the offices of satirical newspaper Charlie Hebdo.

No 10 spoke out after George Osborne pledged to give MI5 and MI6 whatever resources they need to allow them to maintain their “heroic job” in protecting the British people from terrorist threats at home and abroad. The chancellor endorsed the view of the MI5 director general in a speech on Thursday night that the fight against Islamist extremism is Britain’s main national priority.

Osborne told BBC Breakfast on Friday: “My commitment is very clear. This is the national priority. We will put the resources in. Whatever the security services need they will get because they do a heroic job on our behalf.”

The chancellor limited his commitment to offering financial resources to the agencies because the coalition is unable to reach agreement on handing further powers to Britain’s three intelligence agencies: the domestic agency, MI5, the overseas Secret Intelligence Service, MI6, and the UK’s GCHQ eavesdropping centre. The coalition introduced emergency legislation last year – the Data Retention and Investigatory Powers Act – to require internet and phone companies to store their customers’ personal communications data for 12 months and to give access to police.

The Liberal Democrats are resisting handing any further powers to the agencies. Amid a coalition impasse, Downing Street said that the prime minister would make the case to stand by the intelligence agencies.

The prime minister’s spokeswoman said: “The PM’s view is clear that we have to keep talking and working with the agencies on what they need to keep us safe. He will make that case. This is an area where the PM’s overall approach is we should talk to the agencies about the resources and powers they need and work with them to make sure, as a government, we are putting in place all we need to keep us safe.”

Downing Street spoke out after the MI5 director general warned of a dangerous imbalance between increasing numbers of terrorist plots against the UK and a fall in the capabilities of intelligence services to spy on communications. He described the Paris attack as “a terrible reminder of the intentions of those who wish us harm” and said he had spoken to his French counterparts to offer help.

Osborne said the government had recently set aside an extra £100m to allow the intelligence agencies to monitor “self-starter” terrorists travelling to Iraq and Syria.

“In the last few weeks we have put extra money – over £100m – into specifically monitoring people going to conflicts in Syria and Iraq, these self-starting terrorists who get their ideas off the internet and then go and want to perpetrate horrendous crimes,” he told the BBC.

“So we are putting a huge effort in. As the director general of MI5 has said over the last 24 hours, that is the threat we face and we face a threat from more complex plots. So we have got to be vigilant, we have got to have the resources there.”

The chancellor said the agencies were “absolutely in the front line with the police at dealing with this threat. They will get the support they need and indeed in the last few weeks they have got that support”.

Speaking to an invited audience at MI5 headquarters on Thursday, its director general said the threat level to Britain had worsened and Islamist extremist groups in Syria and Iraq were directly trying to orchestrate attacks on the UK. Such an attack was highly likely and MI5 could not guarantee it would be able to stop it, he said.

“Strikingly, working with our partners, we have stopped three UK terrorist plots in recent months alone,” Parker said. “Deaths would certainly have resulted otherwise. Although we and our partners try our utmost, we know that we cannot hope to stop everything.”

Since the Paris attack, Britain had increased security checks at the French border, including carrying out extra vehicle searches, to ensure the suspects did not enter the country, Downing Street said.

The UK, France and the rest of western Europe faced many of the same threats from al-Qaida, from extremist groups in Syria and Iraq, and from elsewhere in the Middle East, Asia and north Africa, Parker said.

He said Islamic State (Isis) was “trying to direct terrorist attacks in the UK and elsewhere from Syria, using violent extremists here as their instruments”. It was “seeking through propaganda to provoke individuals in the UK to carry out violent attacks here”.

With about 50% of MI5’s work devoted to counter-terrorism, Parker said: “My sharpest concern as director general of MI5 is the growing gap between the increasingly challenging threat and the decreasing availability of capabilities to address it.”

Almost all of MI5’s top-priority counter-terrorism investigations had used intercept capabilities in some form to identify, understand and disrupt plots, he said. “So if we lose that ability, if parts of the radar go dark and terrorists are confident that they are beyond the reach of MI5 and GCHQ acting with proper legal warrant, then our ability to keep the country safe is also reduced.”

The intelligence agencies in the UK and the US claim that the Edward Snowden revelations in 2013 about the scale of bulk data collection undermined their capabilities.