William Hague says reports that GCHQ are gathering intelligence from phones and online sites should not concern people who have nothing to hide. The Andrew Marr Show, BBC

William Hague is to make a statement to parliament on Monday to respond to allegations that GCHQ has gathered information on British citizens from internet companies through a secret US spy agency operation.

In his first public comments since the Guardian disclosed GCHQ's alleged role in the US-run Prism programme, the foreign secretary said Britain's electronic and eavesdropping headquarters always acted within the law.

Hague added that it was "fanciful" and "nonsense" to suggest that GCHQ would work with an agency in another country to circumvent the law.

The foreign secretary declined to say whether he had authorised GCHQ's use of the Prism system on the grounds that he never comments on intelligence. But he indicated that he may have done so, though only a modest scale, when he said that the law allowed "targeted" monitoring of terrorists, criminal networks and hostile foreign intelligence agencies.

Hague agreed to make a statement to MPs after the former shadow home secretary David Davis and the Labour chairman of the Commons home affairs select committee, Keith Vaz, raised serious concerns about the GCHQ disclosures.

Documents obtained by the Guardian, which disclosed the Prism system last week, suggested that GCHQ had generated 197 intelligence reports from Prism last year. The system would appear to allow GCHQ to bypass formal legal processes to access personal material, such as emails and photographs, from the world's biggest internet companies.

Hague said GCHQ did monitor traffic, though he said it always acted within the law. He told the Andrew Marr Show on BBC1: "What people need to know is intelligence-gathering in this country by the UK is governed by a very strong legal framework so that we get the balance right between the liberties and privacy of people and the security of the country.

"That provides not for trawling through the contents of people's phone calls. It provides for intelligence gathering that is authorised, necessary, proportionate and targeted on what we really need to know."

The foreign secretary said the UK has enjoyed an "exceptional intelligence sharing relationship" with the US since the second world war. But he said that information from the US which is sent to Britain is governed by UK law.

Hague, who said he authorises operations by GCHQ most days of the week, said: "The idea that in GCHQ people are sitting working out how to circumvent a UK law with another agency in another country is fanciful. It is nonsense."

The foreign secretary said GCHQ, MI5 and MI6 were overseen by the relevant secretary of state, by the interception commission and by parliament's intelligence and security committee.

"If you are a law-abiding citizen of this country going about your business and your personal life you have nothing to fear – nothing to fear about the British state or intelligence agencies listening to the contents of your phone calls or anything like that. Indeed you will never be aware of all the things those agencies are doing to stop your identify being stolen and to stop a terrorist blowing you up tomorrow.

"But if you are a would-be terrorist or the centre of a criminal network or a foreign intelligence agency trying to spy on Britain you should be worried because that is what we work on and we are, on the whole, quite good at it."

Douglas Alexander, the shadow foreign secretary, said: "I called on the foreign secretary to make an urgent statement to parliament on the concerning reports relating to GCHQ and it is right that William Hague has now agreed to do so.

"I've said that it's right that we fully support our intelligence agencies in the work they do to keep us safe, while recognising that they must always operate within a framework of legality and accountability.

"I will be asking the foreign secretary in the House of Commons tomorrow to clarify the role of his department in overseeing those legal frameworks. William Hague must also inform the house of what steps he will take to support the work of the intelligence and security committee as it looks in to these matters.

"It is vital that the government now reassures people who are rightly concerned about these reports."

Speaking on Sky News's Murnaghan programme, the business secretary, Vince Cable, said it was a possibility that the Prism system may have allowed the government to operate a covert sort of snoopers' charter, which the Liberal Democrats oppose.

"Well, it may well have been," he said, when asked if the allegations amounted to eavesdropping by any other name, and added that there were two key issues that the Tories would need to address.

"One is that the Americans have developed this very sophisticated Prism system, which enables them to get access to data in other countries, with or without our knowledge. And there is a separate issue about whether GCHQ were involved in some collaborative exercise," Cable said.

"I think a lot of people will be reassured that we do work well with the Americans, but the whole point about surveillance is you have got to have it when you're dealing with terrorism or other crimes."

He added that all surveillance had to be proportionate, with "some oversight, legal and political".

The Lib Dems have so far resisted plans to forge ahead with the communications data bill, described by some as the snoopers' charter, which would give powers to track people's telephone and internet use.