We are familiar with MI5 and MI6 (otherwise known as the Security Service and Secret Intelligence Service) and their carefully demarcated duties of domestic surveillance and clandestine operations abroad. But we know much less about the largest and most covert of this country's intelligence bodies, GCHQ, or Government Communications Headquarters.

This is disturbing because it is the agency which most directly affects us as citizens, partly because it gobbles the biggest share of public money, but largely because it employs our official buggers – the men, women and, increasingly, computers whose job is not only to eavesdrop on other nations’ political, economic and military secrets but also to keep tabs on our own day-to-day activities. It can do this because it has the potential to (and, despite its protestations, often does) collect and scrutinise our electronic communications, whether by telephone or on the Internet. 

In this way it impinges heavily on our civil liberties. Nevertheless, its ability to perform powerful electronic wizardry and discern from monitored voice patterns, for example, which participants in an al-Qaeda training camp have now established themselves in a town in northern England, has put it at the forefront of the fight against terrorism.

GCHQ’s origins hark back to the First World War when Royal Navy cryptanalysts broke enemy diplomatic codes and so read the notorious Zimmermann telegram, in which the German Foreign Secretary promised Mexico its lost territories in the United States in return for joining the German cause. Not surprisingly, once informed of these details, Washington threw its weight against Germany.

Such successes led to the establishment of the Government Code and Cypher School in 1919. After cutting its teeth reading Soviet and German diplomatic traffic in the inter-war years, the GC&CS earned its place as a great British institution when the boffins assembled at its Second World War headquarters, Bletchley Park, succeeded in breaking German communications traffic encoded by the seemingly impregnable Enigma machine. These ULTRA decrypts were feats not only of intellectual brilliance but also of technical ingenuity, as British engineers played their part by inventing the Colossus, arguably the first computer.

One problem quickly arose, particularly after the Soviet Union became an ally in June 1941: how much do you listen to your friends’ communications, and how much do you share secrets with them? In America’s case, liaison was close, as intelligence cooperation became the core of the ‘special