Merkel spokesman Steffen Seibert said in a statement the chancellor made clear to Obama in a phone call that "she views such practices, if the indications are confirmed ... as completely unacceptable".
Merkel said among close partners such as Germany and the US, "there must not be such surveillance of a head of government's communication," Seibert added. "That would be a serious breach of trust. Such practices must be stopped immediately."
Carney, the White House spokesman, said the US is examining Germany's concerns as part of an ongoing review of how the US gathers intelligence.
The White House has cited that review in responding to similar spying concerns from France, Brazil and other countries.
US allies knew that the Americans were spying on them, but they had no idea how much.
As details of National Security Agency spying programs have become public, citizens, activists and politicians in countries from Latin America to Europe have lined up to express shock and outrage at the scope of Washington's spying.
Merkel had previously raised concerns over the electronic eavesdropping issue when Obama visited Germany in June, has demanded answers from the US government and backed calls for greater European data protection. This week's statement, however, was much more sharply worded and appeared to reflect frustration over the answers provided so far by the US government.
Merkel called for US authorities to clarify the extent of surveillance in Germany and to provide answers to "questions that the German government asked months ago," Seibert said.
Overseas politicians are also using the threat to their citizens' privacy to drum up their numbers at the polls - or to distract attention from their own domestic problems. Some have even downplayed the matter to keep good relations with Washington.
After a Paris newspaper reported the NSA had swept up 70.3 million French telephone records in a 30-day period, the French government called the US ambassador in for an explanation and put the issue of personal data protection on the agenda of the European Union summit that opens Thursday (local time).
"Why are these practices, as they're reported - which remains to be clarified - unacceptable? First because they are taking place between partners, between allies, and then because they clearly are an affront to private life," Najat Vallaud-Belkacem, the French government spokeswoman, said Wednesday.
But the official French position - that friendly nations should not spy on each another - can't be taken literally, a former French foreign minister said.
"The magnitude of the eavesdropping is what shocked us," Bernard Kouchner said in a radio interview. "Let's be honest, we eavesdrop too. Everyone is listening to everyone else. But we don't have the same means as the United States, which makes us jealous. "
The French government, which until this week had been largely silent in the face of widespread US snooping on its territory, may have other reasons to speak out now. The furore over the NSA managed to draw media attention away from France's controversial expulsion of a Roma family at a time when French President Francois Hollande's popularity is at a historic low. Just 23 per cent of French approve of the job he is doing, according to a recent poll.
In Germany, opposition politicians, the media and privacy activists have been vocal in their outrage over the US eavesdropping. Up until now, Merkel had worked hard to contain the damage to US-German relations and refrained from saying anything bad about the Americans.
Merkel has said previously her country was "dependent" on cooperation with the American spy agencies - crediting an American tip as the reason that security services foiled an Islamic terror plot in 2007 that targeted US soldiers and citizens in Germany.
In Italy, major newspapers reported that a parliamentary committee was told the US had intercepted phone calls, emails and text messages of Italians. Premier Enrico Letta raised the topic of spying during a visit Wednesday with Secretary of State John Kerry. A senior State Department official said Kerry made it clear the Obama administration's goal was to strike the right balance between security needs and privacy expectations.
Few countries have responded as angrily to US spying than Brazil. President Dilma Rousseff took the extremely rare diplomatic step of cancelling a visit to Washington where she had been scheduled to receive a full state dinner this week.
Analysts say her anger is genuine, though also politically profitable, for Rousseff faces a competitive re-election campaign next year.
David Fleischer, a political scientist at the University of Brasilia, said since the September 11 attacks Brazilian governments knew the Americans had stepped up spying efforts.
"But what the government did not know was that Dilma's office had been hacked as well," Fleischer said.
Information the NSA collected in Mexico appears to have largely focused on drug-fighting policies or government personnel trends. But the US agency also allegedly spied on the emails of two Mexican presidents, Enrique Pena Nieto, the incumbent, and Felipe Calderon.
The Mexican government has reacted cautiously, calling the targeting of the presidents "unacceptable". Pena Nieto has demanded an investigation but hasn't cancelled any visits or contacts, a strategy that Mexico's opposition and some analysts see as weak.
"Other countries, like Brazil, have had responses that are much more resounding than our country," said Sen. Gabriela Cuevas of Mexico's conservative National Action Party.
Yet Mexico has much-closer economic and political ties to the United States that the Mexican government apparently does not want to endanger.
Beyond politics, the NSA espionage has been greeted with relative equanimity in Mexico, since the government has had close intelligence cooperation with the United States for years in the war on drugs.
"The country we should really be spying on now is New Zealand, to see if we can get enough information so the national team can win a qualifying berth at the World Cup," Mexican columnist Guadalupe Loaeza wrote.
The two rivals play November 13.
- AP
