Canada's spy service says judicial rulings are causing it to lose track of terrorism suspects and new surveillance powers are urgently needed.

On Thursday, Public Safety Minister Steven Blaney announced that the federal government will amend the Canadian Security Intelligence Service Act to restore surveillance powers to the agency and broaden its ability to share information with allies. The proposed amendments would be the first substantial legislative changes since Parliament created the spy agency in 1984.

The changes are aimed at addressing the tensions that have grown as the security force, formed as a domestic-intelligence agency, adjusts to the borderless threat of home-grown terrorist-suspects who travel abroad to fight with extremists and return to Canada.

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Part of the problem, officials say, is that judges have constrained the agency's powers in the name of preserving civil liberties.

"Courts in Canada had some findings recently … that forced us to reconsider the way we undertook some of our operations," Andy Ellis, CSIS's assistant director of operations, said in a news conference with Mr. Blaney in Banff, Alta.

He said a ruling last year caused CSIS to stop using a method of intercepting some Canadian suspects' telecommunications while they are abroad and that, as a result, the spy service has lost track of an untold number of terrorism suspects from Canada.

"We had a black hole," Mr. Ellis said. "We were unable to track where these people were, where they were moving, how they were moving …"

This started happening around the time Islamic State terrorists began gaining ground in Syria and Iraq and urging extremists across the West to join them. Since then, a Canadian has starred posthumously in an IS video. Another is said to have perpetrated an IS suicide bombing in Iraq that killed more than 40 people.

"Events in recent months in Iraq and Syria show us we cannot be complacent," Mr. Blaney said.

Last week, a CSIS official told Parliament that about 130 people from Canada are suspected to have joined extremist causes abroad, and about 80 have returned home – although, he added, no one knows the precise numbers.

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The text of the legislative amendments has not been released, but Mr. Blaney said they are less an overhaul of the CSIS Act than a clarification. The proposals would prevent judges and lawyers from learning the identities of informants in cases that come before the courts, and enhance CSIS's ability to exchange information with the intelligence-sharing alliance known as The Five Eyes (Canada, the United States, the United Kingdom, Australia, and New Zealand).

Observers say amendments will have to be carefully crafted given that Parliament's authority goes only as far as the borders. Most countries pass laws to cover their domestic spy agencies, but few related to foreign-focused espionage.

Yet the explosion of Internet and spying technologies now allows intelligence operatives in Ottawa to monitor international communications, a practice that blurs the lines between foreign and domestic surveillance.

Just as police need warrants to conduct searches, CSIS must get permission from judges to spy on people in Canada. In 2009, Federal Judge Richard Mosley granted the first warrant for the agency to track Canadian terrorism suspects abroad.

In applying for the warrant, CSIS lawyers said the traditional surveillance-in-Canada warrant could be augmented to allow the agency to tap into the powers of Canada's foreign-intelligence eavesdropping service.

Dozens of similar warrants followed. Judge Mosley reversed his original ruling late last year, saying he had new information that led him to conclude CSIS had breached its "duty of candour" to his court, and potentially put Canadian suspects in harm's way.

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He did not go into details, but ruled CSIS consciously omitted to tell judges that it was also seeking the help of the Five Eyes in tracking down Canadian terrorism suspects. The judge said his court never authorized this, and the United States, the U.K. or the other partners could "act independently on CSIS-originated information," and this would increase "the risk of detention or other harm to a Canadian person."