The UK runs a secret internet surveillance station in the Middle East which it uses to capture and process huge quantities of emails, telephone calls and internet traffic on behalf of GCHQ and the US National Security Agency (NSA).
The station, which forms part of the £1bn internet operation codenamed Tempora, is able to intercept and extract data from underwater fibre-optic cables that pass through the region, The Independent reports.
The resulting data is then processed and passed to British spy agency GCHQ and shared with its US counterparts, the NSA.
The government claims that the station is integral to the West's ongoing "war on terror" and provides a crucial "early warning" system for potential attacks anywhere in the world.
This is the latest in a long line of revelations about the UK's spy agency. The Guardian had released several documents leaked by former NSA contractor Edward Snowden that revealed the extent of GCHQ's internet spying operations.
One of these was a document that revealed GCHQ's Tempora programme, which according to the newspaper was built up over five years by attaching "intercept probes" to transatlantic fibre-optic cables where they land on British shores.
These carry data to and from western Europe from telephone exchanges and internet servers in North America. The aim of the programme is the global interception of all digital communications.
The Independent report suggests that the Middle East installation is also connected to the programme and is of high value to the intelligence agencies because it can access submarine cables passing through the region.
All of the information that is uploaded and downloaded through the cables is loaded into some form of data storage and is then analysed for special interest items.
The station was set up under a warrant signed by the-then Foreign Secretary David Miliband, authorising GCHQ to examine and hold on to analysed data that passes through a wide network of fibre-optic cables, The Independent stated.
The certificate authorised GCHQ to obtain data about the "political intentions of foreign powers", terrorism, proliferation, mercenaries, private military companies, and serious financial fraud.
Last month, the Intelligence Security Committee said that claims of GCHQ acting illegally in its Tempora programme were "unfounded" and added that the spy agency did not circumvent UK law. It said that it received reports from GCHQ of formal agreements that regulated access to the material.
However, certificates are re-issued every six months and ministers have the right to alter them if they see fit.
"GCHQ officials are then free to target anyone who is overseas or communicating from overseas without further checks or controls if they think they fall within the terms of a current certificate," The Independent explained.
The location and budget of the Middle East operation are regarded as sensitive by the government and have therefore not been disclosed.