MI5 chief Jonathan Evans says the intelligence agency is working against "astonishing" levels of cyber-attacks on UK industry.
In his first public speech in two years at London's Mansion House, Evans warned that internet "vulnerabilities" were being exploited on an industrial scale by organised cyber criminals as well as states carrying out cyber espionage, the BBC reports. Evans claimed that a British company lost £800m in revenue as a result of such an attack.
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In May, security researchers discovered Flame, described as a powerful cyber espionage weapon with functionality exceeding that of all other known threats.
"This is a threat to the integrity, confidentiality and availability of government information but also to business and to academic institutions," he said.
"What is at stake is not just our government secrets, but also the safety and security of our infrastructure, the intellectual property that underpins our future prosperity and commercially sensitive information," said Evans.
He defended controversial moves to allow security forces to monitor internet communications as set out in the draft Communications Bill.
It would be "extraordinary and self-defeating" if intelligence agencies and police were not allowed to keep pace with terrorists and criminals, Evans said.
Under the proposed legislation, records will be kept of all internet use as well as details of mobile phone calls and texts. This information will have to be kept for a year at an expected cost of at least £1.8bn to taxpayers.
Evans said that the proposals were "necessary and proportionate" to ensure that crimes, including terrorist crimes, can be prevented, detected and punished.
Under the draft Communications and Data Bill, police and the intelligence agencies will be able to access "header" information, including email addresses and mobile phone numbers.
They will not be allowed to access the content of emails, texts and mobile phone calls without a warrant signed by the home secretary. However, it is still unclear whether it is technically feasible to separate material in this way, according to the Guardian.
Senior Conservatives and Liberal Democrats have joined human rights groups raising concerns about the need to store so much data.
When the draft bill was published earlier this month, Nick Pickles, director of campaign group Big Brother Watch, said: “The bill is as expected – an unprecedented and unwarranted attack on our privacy that will see the government track where we make calls, who we email and what everyone does online.
"We are all suspects now. Across 117 pages, the Home Office has set out the greatest attack on private life seen for generations,” he said.