Germany has banned a children's doll capable of listening to children's conversations and responding in real time, with the country's telecommunications watchdog labelling the toy a "concealed surveillance device".

Key points: Germany's watchdog is concerned the toy could be used for surveillance

Germany's watchdog is concerned the toy could be used for surveillance Australian retailers also sell the 'Cayla' doll

Australian retailers also sell the 'Cayla' doll A security consultant says the toy is 'simple to break into'

The My Friend Cayla doll, which is also sold in Australia, uses bluetooth, an internet connection and speech-to-text technology to interact with children.

Germany's Federal Network Agency (Bundesnetzagentur), the country's telecommunications watchdog, said the seemingly-innocuous toy was an example of "unauthorised wireless transmitting equipment".

"Items that conceal cameras or microphones and that are capable of transmitting a signal, and therefore can transmit data without detection, compromise people's privacy," the Federal Network Agency's President Jochen Homann said in a statement.

"This applies in particular to children's toys."

All toys capable of transmitting signals and recording images or sound without detection are banned under German law.

The agency added it was concerned such toys could record and transmit anything a child says without their parents' knowledge.

"A company could also use the toy to advertise directly to the child or the parents," it said.

While the agency has no plans to prosecute parents who do not destroy the toys, it said it was "assuming that parents will take it upon themselves to make sure the doll does not pose a risk".

'Anyone could do it with a phone'

The toy came under scrutiny in 2015 when Ken Munro, from UK-based security consultants Pen Test Partners, discovered it was possible to hack the doll and remotely control what it said.

"It's so simple to break into it, anyone could do it with a phone. All you have to do is turn on bluetooth and connect to the doll and you're potentially listening, spying into the child's room, or you can even talk to the child through the doll," Mr Munro said.

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"If you can connect your phone to your hands-free car kit, you can hack Cayla."

Mr Munro said he was able to make the Cayla doll use foul language and listen in to what was being said around it.

He said internet interactivity was becoming increasingly common in toy manufacturing, creating a dilemma for parents.

"Cayla is just one of a huge number of toys that have got exactly the same problem ... There are so many different devices that do this," he said.

"What worries me is that it's hard for the parent to know."

Genesis Toys, the manufacturer of the Cayla doll, was contacted for comment.