Follows allegations that American agencies bugged phone of Chancellor Angela Merkel.
The German government has announced that it has cancelled a contract with US telecoms firm Verizon as part of a full-scale review of its internal communications following allegations of illegal surveillance by American agencies.
The news comes as Germany carries out an overhaul of its internal government networks following revelations from the NSA whistleblower Edward Snowden that US agencies carried out wiretapping in the country, including eavesdropping on the mobile phone of Chancellor Angela Merkel.
"The pressures on networks as well as the risks from highly developed viruses or Trojans are rising," Germany’s Interior Ministry said in a statement on Thursday.
"Furthermore, the ties revealed between foreign intelligence agencies and firms in the wake of the U.S. National Security Agency (NSA) affair show that the German government needs a very high level of security for its critical networks."
Following the Snowden revelations, Berlin demanded talks with Washington on a "no-spy" deal, but these collapsed after the United States appeared unwilling to give the assurances Germany wanted.
German firm Deutsche Telekom will take over from Verizon, whose contract was due to expire in 2015, having originally signed a deal to provide network infrastructure for the German government’s Berlin-Bonn network, used for communication between ministries.
The Government said that Deutsche Telekom is already responsible for the most sensitive communications between ministries or between the government and German intelligence agencies.
There is understood to be no suggestions that Verizon was involved with any suspected surveillance activity and, in a statement, the company said that its German operations complied with the country’s data protection rules.
"We have made it clear that the US government cannot access customer information that is stored outside the United States," said Detlef Eppig, managing director of Verizon Germany.
The government’s move to shore up its internal defences will hopefully prove to be an example to other businesses in the country. In February, the email addresses and passwords of about 18 million internet users were leaked in what is said to be one of the largest data breaches ever seen in Germany.