"The president assured the chancellor that the United States is not monitoring and will not monitor the communications of Chancellor Merkel," the White House said in a readout of the phone call.
Merkel spokesman Steffen Seibert said Merkel told Obama surveillance of her communications, reported by the German publication Der Spiegel, would be "completely unacceptable."
"This would be a serious breach of trust," Seibert said Merkel told Obama. "Such practices should be stopped immediately."
Der Spiegel reported the surveillance, based on a review by the Federal Intelligence Service and the Federal Office for Security in Information Technology.
Seibert said Merkel told Obama Germany expects U.S. authorities will brief Germany "about the possible overall scope of such monitoring practices against Germany."
"As a close ally of the United States of America, the federal government expects for the future a clear contractual basis on the activities of the services and their cooperation," he said.
"The United States greatly values our close cooperation with Germany on a broad range of shared security challenges," the White House statement said. "As the president has said, the United States is reviewing the way that we gather intelligence to ensure that we properly balance the security concerns of our citizens and allies with the privacy concerns that all people share."
The White House said Obama and Merkel "agreed to intensify further the cooperation between our intelligence services with the goal of protecting the security of both countries and of our partners, as well as protecting the privacy of our citizens."
A U.S. National Security Council spokeswoman told Der Spiegel Obama assured Merkel "the United States does not monitor" her communications, but the publication noted the U.S. spokeswoman did not say whether the denial applies to possible past surveillance.
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