It was constitutionally wrong for any legal party or entity to be bugged by statutory intelligence bodies, National Intelligence Agency co-ordinator Linda Mti said on Sunday.
Interviewed on SABC television's Newsmaker programme, Mti was asked to respond to the Democratic Party's claim on Friday that their Cape Town offices were being monitored using electronic devices.
"National intelligence agents had no reason to bug DP offices," he said.
Mti added that a meeting would be held to discuss the allegations.
On Friday morning, the DP lifted the lid on what it claimed was South Africa's Watergate, saying its parliamentary offices and its nearby national and Western Cape offices were being electronically monitored.
Though it did not directly blame the NIA, the DP said some of the monitoring was being done from an adjacent government office block.
Spokesperson Douglas Gibson on Sunday confirmed the DP was consulting its legal representatives on the matter.
Mti said the four statutory intelligence services - the NIA, the Secret Service, police and the defence force - had to obtain a judge's permission to monitor a person or organisation.
This was not the case for private security organisations.
The NIA was transparent in that is was accountable to bodies like the Public Protector and the Human Rights Commission. The nature of the agency was however secretive, Mti said.
Mti also revealed some other facts about the usually clandestine operations of the Intelligence Ministry.
He conceded a high labour turnover in the industry.
Mti said legislation was needed to ensure agents never joined other intelligence networks, thereby giving away top government secrets.
When asked if the NIA monitored embassies, in light of the recent discovery of a video camera directed at the gates of the German embassy in Pretoria, Mti said: "What I am saying is we have to ensure that we do not allow our people to be victim of recruitment by foreign intelligence services.
"The intelligence and security apparatus have got a responsibility to protect the country and its people. Anybody who is a threat to law and order and to our people's lives, would therefore be subject to be monitored."
The video camera, hidden in a dustbin, was found outside the German embassy last Thursday.
A government source on Friday told Sapa that the so-called spy camera was part of an anti-crime operation.
"It was a case of good intentions that went awry," the normally reliable source told Sapa in Pretoria.
"This surveillance had nothing to do with spying. The camera was set up to gather information about criminal activities, but some official bungled and failed to inform the German embassy of the operation."
The camera had apparently never been activated. The source could not confirm that the National Intelligence Agency was involved, and spoke only of the "security community".
The Sunday Times however reported that the camera was part of an operation aimed at countering the recruitment of South Africans by German intelligence.
The newspaper, quoting an unidentified NIA source, said the camera was used to identify South African agents entering or leaving the premises.
The report said the National Intelligence Agency implemented a counter offensive in 1995 after several experienced South Africans were reportedly approached by the Germans to work for their intelligence network.
The NIA secured a house opposite the embassy and installed bugging equipment there a few months ago to monitor goings on, the newspaper reported.
It apparently also tried to recruit German embassy staff to understand why the Germans were seeking the services of South Africans, the report said.
Dennis Nkosi, general manager for the Ministry of Intelligence Services, on Sunday refrained from commenting on the report.
"Whether allegations in the Sunday Times are true or false remain to be proven," he told Sapa.
He reiterated that an investigation, ordered by Minister Joe Nhlanhla on Thursday, was underway.
The probe would be headed by Zola Ngcakani, Nkosi said. - Sapa